For the first time in nearly three years, UK house prices have recorded an annual decrease, according to the latest data from Lloyds. The report indicates a 0.4% drop in property values compared to the same period last year, marking the first year-on-year decline since November 2023. This figure fell short of economist expectations, which had predicted a 0.2% annual increase.

On a monthly basis, the average property price fell by 0.2%, or £685, bringing the average cost of a home to £298,468 in August. Lloyds attributes this cooling in the market to a combination of higher mortgage rates, geopolitical uncertainty, and stretched affordability for prospective buyers. While the market has seen consistent growth for several years, this shift suggests that the cumulative impact of interest rate hikes is now exerting downward pressure on valuations across the country, with London and the south of England noted as areas leading the decline.