UK House Prices Fall 1.2% Annually as Lloyds Index Records Steepest Decline Since 2023

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British house prices fell in October at their fastest annual pace in three years, according to the latest index from Lloyds, offering another indication that higher borrowing costs are weighing on the market even as different measures of property values give conflicting signals.

The Lloyds House Price Index, released November 6, recorded a 0.6% monthly decline and a 1.2% annual decline. The average price was £296,285. Lloyds said the annual decrease was the largest since October 2023. The index also showed a 0.5% fall over the latest three-month period.

The monthly reading followed a 0.1% decline in September. A one-month movement does not establish a prolonged downturn, but the latest data add to evidence that mortgage affordability is restricting demand. Lloyds attributed some of the pressure to renewed inflation and higher borrowing costs, with household budgets also absorbing increased energy and other expenses.

Mortgage costs test buyer budgets

Andrew Assam, mortgages director at Lloyds, described the economic backdrop as challenging and said prospective buyers had become more cautious. The bank does not expect an extended period of falling house prices, according to its November release, and pointed to wages growing faster than property values as a possible longer-term source of affordability improvement. That is the bank’s assessment, rather than a forecast guaranteed by the index.

The timing matters. The Bank of England raised its policy rate on November 5, a development that could keep financing conditions difficult for households whose borrowing costs are tied to lenders’ funding markets or whose fixed-rate deals are approaching renewal. Mortgage pricing depends on more than the current central-bank rate, however. Swap markets, lender competition, credit characteristics and product terms also influence what an individual borrower pays.

Why the other house-price index looks different

Nationwide’s separate October measure suggested annual price growth of approximately 0.5%, rather than the 1.2% annual fall reported by Lloyds. The disagreement does not mean one measure necessarily invalidates the other. Both use lender-linked mortgage information, but their samples, adjustments and calculation methods differ. Neither index is a census of all completed property transactions, including cash purchases.

The Lloyds series was previously published under the Halifax name. Lloyds changed the branding in July 2026 while retaining the underlying methodology, which already incorporated both Halifax and Lloyds mortgage data. The index calculates a standardized property price and seasonally adjusts the series to make periods more comparable.

For estate agents and mortgage intermediaries, the practical implication is a market in which sellers’ pricing expectations may lag buyers’ financing capacity. A decline in a national index does not describe every local market or property type, and individual negotiations will still depend on supply, location and condition. The next readings will help establish whether October marks a broader shift or another short-lived movement in an uneven market.

Primary source: Lloyds House Price Index, October 2026, released November 6.