UK house prices declined 0.6% in October 2026, marking the sharpest monthly fall in at least a year, as higher borrowing costs and continued economic uncertainty weighed on housing demand, according to the latest Lloyds House Price Index.
The average UK property price fell to £296,285, compared with £298,167 in September, when prices declined 0.1%.
On an annual basis, house prices were 1.2% lower, representing the weakest yearly performance since October 2023.
Prices also decreased 0.5% in the three months to October compared with the preceding three-month period, indicating continued weakness in the residential property market.
Higher Mortgage Costs Weigh on Buyer Confidence
Lloyds attributed the slowdown to persistent inflationary pressures and elevated borrowing costs, which have reduced affordability for prospective homebuyers.
Inflationary pressures linked partly to the conflict in the Middle East have contributed to higher financing costs, while household budgets remain under pressure.
Andrew Asaam, Mortgages Director at Lloyds, said housing demand was being affected by the challenging economic environment, prompting some prospective buyers to delay purchasing decisions.
Although Lloyds expects market conditions to remain subdued in the near term, the lender does not anticipate an extended period of falling property prices.
The bank noted that wage growth continues to outpace house price inflation, which could gradually improve affordability and provide some support for demand.
London Records Steepest Annual House Price Decline
Greater London experienced the largest annual decline among UK regions, with average property prices falling 3.1% to £524,892.
The South East and South West also recorded notable reductions, with prices declining 2.4% in both regions.
Average property values stood at £379,258 in the South East and £298,057 in the South West.
By contrast, Northern Ireland continued to record the strongest annual price growth, although the pace of increase moderated.
Property prices in Northern Ireland rose 4.4% to £228,708, compared with annual growth of 6.9% in September.
Scotland recorded a 2.8% increase to £222,667, while prices in Wales advanced 1.6% to £233,116.
Northern England Shows Greater Price Resilience
Housing market performance across England remained mixed, with northern regions generally outperforming the south.
The North West recorded annual price growth of 2.2%, taking the average property value to £249,916.
In the North East, prices increased 2.0% to £184,318, maintaining the region’s position among the more affordable housing markets in the country.
The West Midlands was the only other English region to record annual growth, with prices rising 0.3% to £261,656.
The regional figures highlight continued differences in housing market performance, with higher-priced southern markets experiencing greater downward pressure.
Mortgage Approvals and Property Transactions Decline
Separate figures from HM Revenue & Customs indicated that UK residential property transactions weakened in September.
Seasonally adjusted home sales fell 0.5% to approximately 94,800, representing a 3.6% decline compared with September 2025.
Bank of England data also showed a reduction in mortgage lending activity.
Mortgage approvals for house purchases declined 2.5% in September compared with August, falling to 53,443.
Approvals were 19.4% lower than in the corresponding month last year, reflecting reduced demand from prospective buyers.
Survey evidence from the Royal Institution of Chartered Surveyors pointed to similar weakness.
The net balance for new buyer enquiries deteriorated to minus 22% in September from minus 18% in August, while the agreed sales balance weakened to minus 18% from minus 16%.
However, new property instructions improved to a positive net balance of 6%, the first positive reading since mid-2025.
The increase in properties coming onto the market, combined with weaker buyer demand, suggests that supply conditions may continue to place pressure on house prices in the near term.
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