UK house prices fell by 0.6% in October, pushing the average property price down to £296,285, according to the latest Lloyds House Price Index.

The figures show that prices fell from £298,167 in September, while the annual rate of decline reached 1.2% – the biggest year-on-year fall since October 2023.

Andrew Asaam, mortgages director at Lloyds, said the economic backdrop was testing housing demand, with the Middle East conflict pushing up inflation and keeping borrowing costs high.

He said: “UK house prices fell by 0.6% in October, a larger drop than in recent months, taking the average property price down to £296,285. Prices were also 1.2% lower than a year ago, the biggest annual fall since October 2023.

“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.”

The picture across the UK remains mixed, with Northern Ireland continuing to record the strongest annual house price growth.

Prices there rose by 4.4% over the year to an average of £228,708, although this represented a significant slowdown from the 6.9% annual growth recorded in September.

Scotland also continued to perform strongly, with prices increasing by 2.8% to an average of £222,667.

Wales recorded annual growth of 1.6%, taking the typical property value to £233,116.

In England, only three regions recorded positive annual growth. The North West saw prices rise by 2.2% to £249,916, while the North East recorded an increase of 2% to £184,318.

The West Midlands was the only other English region to see prices increase, with annual growth of 0.3% taking the average property value to £261,656.

However, southern England continued to experience downward pressure, with Greater London recording the largest annual decline.

Prices in the capital fell by 3.1% over the year to an average of £524,892. The South East and South West both recorded declines of 2.4%, with average prices of £379,258 and £298,057 respectively.

Lloyds’ findings of falling house prices echo those of the Office for National Statistics, Nationwide, Zoopla and more.