UK house prices fall 0.6% in October, steepest drop
October saw the sharpest monthly decline in UK house prices in over three years, with average values at £296,285 and a vs a 1.2% annual drop.
At a glance
- UK house prices fell 0.6% in October 2026, the steepest monthly decline in more than three years.
- Average property price was £296,285, down 1.2% from the previous year, the biggest annual fall since October 2023.
- Mortgage rates remain high at 5.97% for two‑year fixes and 5.99% for five‑year fixes, following a Bank of England rate rise to 4%.
In October 2026, UK house prices fell at their steepest rate in more than three years, with the average property price at £296,285.
The 0.6% monthly decline was the sharpest since Lloyds recorded a 1.6% drop in August 2023, marking the fourth consecutive month of falling values. Analysts had expected a modest 0.1% rise, which would have been the first increase since June.
Borrowing costs remain elevated, with two‑year fixed mortgages averaging 5.97% and five‑year fixes at 5.99%, according to Moneyfacts. The Bank of England raised its base rate by a quarter point to 4% in November, the first increase in three years, to combat inflation driven by Middle‑East tensions.
Andrew Asaam, mortgages director at Lloyds, said housing demand is being tested by a challenging economic backdrop, as renewed inflationary pressures keep borrowing expensive. Amy Reynolds, head of sales at the Richmond estate agency Antony Roberts, noted that buyers are still present but cautious, with remortgagers and “second‑steppers” feeling the squeeze. She added that the psychological impact of further rate rises makes some hesitate.
Outlook for 2028 Savills warned that the sluggish market is unlikely to recover until 2028, when improved economic conditions and better mortgage affordability are expected to support a rebound.
Source: The Guardian Business.
Questions and answers
- Why did UK house prices fall in October 2026?
- High mortgage rates and inflationary pressures from the Middle East conflict made borrowing more expensive, dampening buyer demand.
- What was the average UK house price in October?
- The average price was £296,285.
- When is the housing market expected to recover?
- Savills forecasts a recovery by 2028 when the economy and mortgage affordability improve.
