UK house prices fall for first time since 2023
UK house prices have recorded their first annual decline in nearly three years, dropping 0.4% in August. The fall was led by the south-east and London, while Northern Ireland saw the strongest growth.
UK house prices fell in August for the first time on an annual basis since November 2023. According to lender Lloyds, prices dropped by 0.4% compared with a year ago, missing economist expectations of a 0.2% rise.
The average property now costs £298,468. This represents a monthly fall of 0.2%, or £685, from July. Andrew Asaam, a director at Lloyds, described the housing market as "subdued" due to higher inflation, borrowing costs, and geopolitical tensions.
"What we're not seeing is a rush of homeowners cutting prices," he said. He added that many sellers are choosing to wait rather than accept low offers, while some buyers are also holding back to see how conditions develop. The market is forecast to remain subdued in the coming months.
Mortgage rates and market activity
Prospective buyers face significantly higher mortgage costs than at the start of the year. Data from Moneyfacts shows the average two-year fixed residential mortgage rate was 5.63% this week, with the average five-year deal at 5.68%. Both were below 5% in January. Lloyds also reported that mortgage approvals have fallen to their lowest level since early 2024.
Tensions in the Middle East have fueled inflation fears this year, contributing to expectations of further interest rate rises. This has created months of volatility for those seeking mortgage deals.
A regional divide in prices
The slowdown has played out differently across the UK, creating a stark north-south divide. Northern Ireland was the strongest performer, with prices rising 6.9% over the year to an average of £231,245.
| Region | Annual Price Change | Average Price |
|---|---|---|
| Northern Ireland | +6.9% | £231,245 |
| Scotland | +3.5% | £223,437 |
| Wales | +0.6% | £230,282 |
| North East England | +2.7% | £184,370 |
| North West England | +2.0% | £248,675 |
| South East England | -1.6% | £381,729 |
| Greater London | -1.5% | £534,177 |
In England, the north-east and north-west saw growth of 2.7% and 2% respectively. Meanwhile, the south-east reported the UK's largest price drop at 1.6%. Prices in Greater London fell 1.5% to an average of £534,177.
Estate agent perspective
Jeremy Leaf, a north London estate agent, said the market reflects a standoff. Nervous buyers are facing sellers who believe they have already reduced prices as much as possible. "There is more movement when sellers set realistic asking prices from the outset," he noted.
Leaf observed that activity is beginning to pick up now the main holiday season is over, which is helping to improve confidence slightly.
Analyst Anthony Codling of RBC Capital Markets said the figures show a market under meaningful pressure from high mortgage rates, geopolitical uncertainty, and a stretched, cautious consumer. He stated that sellers are not panicking but are sitting tight, while buyers await clarity on the future path of interest rates.
