UK house prices fall for first time since November 2023, Lloyds data shows

By David Milliken

LONDON, Sept 7 (Reuters) - 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 U.S.-Iran war, monthly figures measured by Lloyds showed on Monday.

Lloyds house price data – previously released under its Halifax brand – showed a 0.4% annual drop in August, the first such decline since November 2023, compared with economists' median expectation in a Reuters poll for a 0.2% rise.

In August, prices fell 0.2% versus expectations for a 0.1% rise, while July's initial reading of 0.1% growth was revised down to show a 0.1% 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% annual growth in house prices in August and a 0.2% rise on the month.

Ruth Gregory, deputy chief economist at Capital Economics, said 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% this month from 4.8% 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% higher in Q4 2026 than a year ago," she said.

The most recent official data on house prices, from the Office for National Statistics, showed that prices had risen 2.0% in the 12 months to June, down from 3.0% growth in the year to May.

(Reporting by David Milliken; editing by Sarah Young and Elizabeth Piper)