UK house prices recorded their first year-on-year decline in almost three years in August, driven largely by falls in London and the south‑east, lender Lloyds said. The average property was valued at £298,468, a 0.4% drop compared with August last year.
The fall breaks a run of annual increases that had persisted since late 2023 and comes amid a backdrop of higher mortgage rates, which lenders and analysts say are squeezing prospective buyers. Lloyds pointed to elevated interest rates, geopolitical uncertainty and stretched affordability as key factors weighing on demand.
The outcome was also weaker than economist forecasts: a Reuters poll had expected a 0.2% annual increase in August. The divergence underlines signs of cooling in parts of the housing market that had previously shown resilience.
Regional patterns were uneven, with London and the south‑east leading the downturn, while other areas showed more limited movement. Market watchers say such regional disparities are likely to persist as buyers respond to local affordability, employment and lending conditions.
The decline is likely to keep attention on policymakers and lenders as they assess the interaction between interest rates and the housing market. For now, figures from Lloyds suggest the cumulative effect of higher borrowing costs and wider economic uncertainty is beginning to temper price growth after a period of recovery.