UK house prices fell 1.2% year-on-year in October 2026, the steepest annual decline since October 2023, according to the Lloyds House Price Index. Prices also slipped 0.6% month-on-month, taking the average property value to £296,285, down from £298,167 in September.
The fall is not even across the country. Northern Ireland is still the strongest market, though its growth rate has cooled to 4.4% from 6.9% the previous month. Scotland (+2.8%) and Wales (+1.6%) are still rising, as are three English regions — the North West (+2.2%), North East (+2.0%) and West Midlands (+0.3%). Greater London recorded the steepest annual decline of any region, down 3.1%, followed by the South East and South West, both down 2.4%.
Jonathan Hopper, chief executive of buying agency Garrington Property Finders, said the South is in “sharp correction territory,” driven by higher borrowing costs and buyers betting that prices will fall further if they wait. He warned that strategy carries risk: the Bank of England has signalled that interest rates could rise further, which could erase any savings from a lower purchase price through higher monthly payments.
Lloyds mortgages director Andrew Asaam and north London estate agent Jeremy Leaf, a former RICS residential chairman, both framed the October dip as a continuation of two years of broad stability rather than the start of a sustained downturn — they pointed to wage growth continuing to outpace house-price growth as a reason affordability should gradually improve.
Landlords who held on to their portfolios are seeing yields rise
Separately, London-based lettings and property-management agency Virelle Group reports that landlords who kept their rental properties — rather than selling, as many did earlier this year ahead of the Renters’ Rights Act and rental-income tax changes due from April 2027 — are now seeing stronger tenant demand and higher yields. The agency estimates that properties which previously yielded 4-5% a year could now generate 7-9%, though it says these figures have not been independently verified. Virelle Group director Emily Robison linked the trend partly to the Bank of England’s rate rise to 4%, which she said is likely to keep more aspiring buyers renting for longer.
References
Introducer Today – Biggest Annual House Price Fall in 3 Years / PropertyWire – Landlords Retaining Portfolios See Yields Rise to 9%
