UK house prices fall for first time since November 2023
Lloyds house price data showed a 0.4% annual drop in August
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[LONDON] British house prices recorded their first annual fall in nearly three years in August as some buyers have held back on purchases due to higher borrowing costs following the US.-Iran war, monthly figures measured by Lloyds showed on Monday (Sep 7).
Lloyds house price data showed a 0.4 per cent annual drop in August, the first such decline since November 2023, compared with economists’ median expectation in a Reuters poll for a 0.2 per cent rise.
In August, prices fell 0.2 per cent versus expectations for a 0.1 per cent rise, while July’s initial reading of 0.1 per cent growth was revised down to show a 0.1 per cent fall.
“The housing market has faced a more difficult backdrop in recent months, with the impact of global events on inflation and borrowing costs creating greater economic uncertainty,” said Andrew Asaam, mortgages director at Lloyds.
“What we’re not seeing is a rush of homeowners cutting prices. 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.
By contrast, figures last week from rival mortgage lender Nationwide Building Society showed 1.6 per cent annual growth in house prices in August and a 0.2 per cent rise on the month.
Ruth Gregory, deputy chief economist at Capital Economics, said that she expected further weakness in house prices ahead as a recent rise in market interest rates suggested typical interest rates on a two-year fixed-rate mortgage would rise to nearly 5 per cent this month from 4.8 per cent in July.
“Our forecast is that house prices will do little more than flatline over the remaining four months of this year, leaving prices about 1.5 per cent higher in Q4 2026 than a year ago,” she explained.
The most recent official data on house prices, from the Office for National Statistics, showed that prices had risen 2 per cent in the 12 months to June, down from 3 per cent growth in the year to May. REUTERS
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