UK house prices recorded their biggest annual fall in three years in October, according to an index.
The average property value fell by 1.2% annually, marking the steepest decrease since October 2023, Lloyds said.
The average property price in October is £296,285, marking a £1,882 or 0.6% fall compared with September.
Andrew Asaam , mortgages director at Lloyds, said: “Housing demand is currently being tested by a challenging economic backdrop.
“Renewed inflationary pressures, driven in part by the conflict in the Middle East, are keeping borrowing costs high and adding to the squeeze on household finances, making some buyers understandably more cautious.
“However, it’s important to put October’s fall in context.
“House prices have changed relatively little over the past couple of years, as the market has gradually adjusted to higher interest rates.
“The recent rise in energy and other household costs has added to the pressure on buyers, so some adjustment in prices is not surprising.
“Looking ahead, conditions are likely to remain subdued in the near term, but we don’t expect this to lead to a sustained period of falling house prices.
“With wages continuing to rise faster than property prices, the gap between earnings and house prices should gradually narrow, helping affordability to improve over time.”
On Thursday, the Bank of England base rate increased by 0.25 percentage points to 4%, in the first rise in interest rates in more than three years.
Based on typical outstanding mortgage balances, UK Finance said the increase for homeowners on tracker deals would be £30.72 on average.
Around nine in 10 (87%) outstanding homeowner mortgages are fixed rates.
Some 2.3 million fixed-rate deals are due to expire in 2027, according to the analysis by UK Finance.
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