UK House Prices Drop in October
UK house prices fell by 0.6% in October. This marks the largest annual decline in over three years. The average property price is now £296,285, according to Lloyds. This decline is the fourth monthly drop in a row. Prices are down 1.2% compared to the same month last year. This is the steepest drop since October 2023.
Andrew Asaam, mortgages director at Lloyds, said that housing demand is facing challenges due to a tough economic backdrop. He noted that renewed inflation pressures, partly from the conflict in the Middle East, are keeping borrowing costs high. This situation is squeezing household finances. Asaam added, "Some buyers are understandably more cautious." The Bank of England raised its base rate by 0.25 percentage points to 4% this week. This is the first increase in over three years and is expected to further raise borrowing costs.
The average two-year fixed mortgage rate is now 5.97%. The five-year fixed rate stands at 5.99%, according to Moneyfacts. The rise in borrowing costs is especially tough for those remortgaging or looking to upgrade their homes. Amy Reynolds, head of sales at Antony Roberts, said the market has lost momentum as the year ends. She noted that buyers are remaining cautious.
Related coverage: UK Unemployment Falls to 4.7% as Job Vacancies Decline, UK Inflation Expected to Rise to 3.4% in September.
The decline in house prices is likely to affect the housing sector and mortgage lending. Higher borrowing costs may deter potential buyers. Investors will watch for more economic indicators. They will also monitor the impact of ongoing inflation on consumer confidence and housing demand.
Based on reporting by: standard.co.uk, theguardian.com