UK house prices have recorded their first annual decline since November 2023 as higher mortgage rates and affordability pressures weigh on buyers, reports Asian Lite News Desk
UK house prices have recorded their first annual fall in almost three years, as higher mortgage rates, stretched affordability and geopolitical uncertainty put pressure on buyers. Prices fell by 0.4% in August compared with a year earlier, the first annual decline since November 2023, according to Lloyds. Economists polled by Reuters had expected a 0.2% increase.
The average property cost £298,468, down 0.2%, or £685, from July, the lender’s monthly index showed. Mortgage approvals were at their lowest level since the start of 2024, Lloyds said. Andrew Asaam, a director at Lloyds, described the housing market as “subdued” amid higher inflation, borrowing costs and geopolitical tensions.
“What we’re not seeing is a rush of homeowners cutting prices,” he said. “But more are choosing to sit tight, with sellers reluctant to accept offers they feel are too low, while some buyers are waiting to see how conditions develop.” He added that the market was forecast to “remain fairly subdued in the months ahead, but this will likely only have a limited impact on house prices”.
Tensions in the Middle East have fuelled concerns about inflation this year, feeding expectations of further interest rate rises and contributing to uncertainty over borrowing costs. Buyers seeking mortgages have faced months of volatility. The average interest rate on a two-year fixed residential mortgage stood at 5.63% on Monday, according to Moneyfacts, while the average five-year rate was 5.68%.
Both averages were below 5% at the beginning of the year, illustrating the increase in borrowing costs facing prospective buyers. Jeremy Leaf, an estate agent in north London, said the slowdown reflected a “standoff” between nervous buyers and sellers who believed they had already reduced their prices as much as they could.
“There is more movement when sellers set realistic asking prices from the outset and appreciate after a period of marketing that even a cheeky offer is worth considering,” he said. “Activity is picking up now that the main holiday season is over, which is helping to improve confidence a little.”
The national decline concealed substantial regional differences, with prices continuing to rise in Northern Ireland, Scotland, Wales and parts of northern England. Northern Ireland recorded the strongest annual growth across the UK, with prices rising 6.9% to an average of £231,245. Scotland registered a 3.5% increase to £223,437, while prices in Wales rose 0.6% to £230,282.In England, the figures showed a divide between northern and southern markets. Prices in the north-east increased by 2.7% to an average of £184,370, while the north-west recorded growth of 2% to £248,675. The south-east experienced the largest annual fall across the UK, with prices down 1.6% to an average of £381,729. Greater London followed with a 1.5% decline, taking the average property price to £534,1
