House prices fall 0.6% as London sees biggest drop in the UK

Updated 6 Nov 2026, 20:58 · First published 6 Nov 2026

UK house prices fell by 0.6% in October, and prices are now 1.2% lower than a year ago, the biggest annual fall in three years. London is falling fastest, with prices in the capital down 3.1% on last year, according to the latest Lloyds house price index published on Friday.

Why are house prices falling?

Higher borrowing costs are the main reason. Inflation has picked up again, partly because of the conflict in the Middle East pushing up energy prices, and the Bank of England raised interest rates to 4% on Thursday. That makes mortgages more expensive and puts off some buyers.

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Andrew Asaam, mortgages director at Lloyds, said prices fell by 0.6% in October, “a larger drop than in recent months”. But Lloyds does not expect a long period of falling prices, because wages are now rising faster than house prices, which should slowly make homes more affordable.

What does it mean for you?

If you are buying, especially in London, you may find sellers more willing to negotiate. If you are selling, it may take longer and you may need to price more realistically. If you have a mortgage deal ending soon, now is a good time to compare rates, as lenders are changing their deals after the interest rate rise.

This article is general information, not financial advice. Speak to a regulated mortgage adviser about your own situation.

Sources: Lloyds house price index (October 2026), Bank of England.