Residential property values dropped 0.6% in October, marking the fourth consecutive monthly fall and leaving prices 1.2% lower than the same period last year. The downturn intensified after central bankers lifted borrowing costs to tame 3.5% inflation fueled by Middle East conflicts that pushed oil prices past $100 a barrel. Buyers now face two-year and five-year fixed mortgage rates hovering around 6%, significantly straining households attempting to remortgage or move to larger properties. Industry experts at Savills project that a meaningful turnaround in market activity will not occur until 2028.
Key points
Average two-year and five-year fixed mortgage rates around 6% are making buyers increasin…: Average two-year and five-year fixed mortgage rates around 6% are making buyers increasingly cautious.
Households needing to remortgage or upgrade to larger homes face the most severe financia…: Households needing to remortgage or upgrade to larger homes face the most severe financial strain in this high-rate climate.
Property services firm Savills forecasts that Britain's housing market will not experienc…: Property services firm Savills forecasts that Britain's housing market will not experience a genuine recovery until 2028.
Sources checked by our analysis pipeline: 1
UK house prices fell at the steepest rate in more than three years in October, marking the fourth consecutive monthly decline, as high mortgage rates hit the housing market.
The average price of a typical UK property stood at £296,285 last month as prices unexpectedly fell 0.6% compared with September, the steepest fall since the lender Lloyds recorded a 1.6% drop in August 2023.
Analysts had expected a small monthly rise of 0.1%, which would have marked the first monthly increase since June.
House prices were down 1.2% compared with the same month last year, the biggest annual fall since October 2023.
“Housing demand is currently being tested by a challenging economic backdrop,” said Andrew Asaam, the mortgages director at Lloyds. “Renewed inflationary pressures, driven in part by the conflict in the Middle East, are keeping borrowing costs high and adding to the squeeze on household finances, making some buyers understandably more cautious.”
Prospective buyers are facing increasingly high borrowing costs, with the average two-year fixed mortgage running at 5.97% and the average five-year fixed rate at 5.99%, according to…
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