Lloyds index puts the steepest house price falls in London and the South East
London house prices fell 2.2% in the year to September, the Lloyds index shows, while the UK average held flat. For employers with staff in the south, cheaper homes now come with dearer mortgages, so pay and housing decisions depend on the regional figures.
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What happened
- South East prices fell almost as far as London's, down 2.1% over the year to an average of £380,829.
- London's annual decline has widened from the 1.5% recorded in the year to August.
- Mortgage rates have climbed since the US and Israeli invasion of Iran in February, and the average five-year rate passed 6% this week for the first time in three years.
- Barclays, HSBC and Lloyds were among the lenders that raised rates after last week's jump in global borrowing costs, according to Moneyfacts.
- Money markets are pricing as many as four Bank of England rate rises by next summer, and most economists expect one this month.
Why it matters
- What it costs cost Staff outside the south pay the higher borrowing costs and get no price fall to offset them. A flat UK average alongside falls in three southern regions means prices elsewhere held steady or rose.
- Who has to decide decision Benchmarked to the UK index, a London weighting would show housing costs unchanged. The capital's own figures show cheaper homes bought with dearer loans.
- Who's exposed exposure Recent buyers in London and the South East face two risks at once: a home worth about 2% less, and a higher rate when their fixed deal ends.
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Lloyds' mortgages director reads the September index as evidence that prices have held up. "While the market overall has been fairly subdued, property prices have so far proved resilient during a period of higher mortgage rates, which has been driven by changing expectations around the future path of Base Rate," Andrew Asaam said [3]. That fits the national figure better than the southern ones. City AM's report puts the falls in London and southern England down to rising mortgage rates and stamp duty [17].
An employer setting a London weighting, or deciding where a team sits, will find the year's falls small next to the gaps between regions. Using the index's rounded percentages, the average London home lost about £12,000 over the year, from roughly £543,500 [13]. The South East average lost about £8,200 [14]. It is still £150,719 below London's, about 28% less [15]. Eastern England's average, down 1.6% to £330,151 [11], is about £201,000 below the capital's [16].
What a staff member pays for housing depends on two things: the price and the loan rate. In London the two have moved in opposite directions this year [8][2]. Lloyds publishes the index and is also one of the lenders Moneyfacts listed as raising rates [8][4]. The report does not give the average rate before February, so it is not possible to work out from it how much a London buyer's monthly payment has changed.
The dates that could move both prices and rates are weeks away. The budget is due later this month. Jason Tebb, president of On The Market, said: "We already know that there will be assistance for first-time buyers buying new-build homes" [6]. Andy Burnham announced a new equity loan scheme for first-time buyers last week [7].
For an operator with staff in London and the South East, the trade-off is timing. A housing allowance or London weighting fixed this quarter is set against September's prices and current rates, before the Bank of England's decision and the budget [5][6]. Waiting a few weeks gives a firmer number. Settling now gives staff certainty sooner, but next quarter the figure will be judged against borrowing costs that money markets expect to be higher [5]. I'd set it against the London and South East figures. Over the year, the UK average has not moved [1].
What to watch
- Whether the Bank of England raises rates this month, as most economists expect, and how many further rises markets then price.
- The budget later this month, and whether its help for first-time buyers extends beyond new-build homes.
- October's Lloyds index, and whether London's annual fall widens past 2.2% or the UK average turns negative.
Clarity's read
What the record supports and how the coverage leans. The claims behind it follow.
Reality
- Evidence68
- Adoption
- Not scored
- Hype gap+15
- Incentives55
- Confidence66
Claim ledger
Ranked by verification strength, evidence, and original report placement.
- [1]
Across the UK, house prices were unchanged in the month to September and year on year, an improvement from the previous month's 0.3 per cent drop.
- [2]
Mortgage rates have jumped since the US and Israel's invasion of Iran in February; earlier this week the average five-year mortgage rate broke 6 per cent for the first time in three years.
- [3]
"While the market overall has been fairly subdued, property prices have so far proved resilient during a period of higher mortgage rates, which has been driven by changing expectations around the future path of Base Rate."
- [4]
Last week's surge in global borrowing costs prompted lenders including Barclays, HSBC and Lloyds to raise their rates.
- [5]
Money markets have tipped the Bank of England to raise interest rates as many as four times by summer next year, with most economists expecting a rise this month.
- [6]
"All eyes will be on the budget later this month to see what the new Prime Minister and Chancellor have planned. We already know that there will be assistance for first-time buyers buying new-build homes"
- [7]
Last week, Andy Burnham announced a new equity loan scheme for first-time buyers.
- [8]
The average house price in London fell by 2.2 per cent to £531,548 in the year to September, according to the Lloyds house price index.
- [9]
London's annual house price fall in August was 1.5 per cent, a smaller drop than September's 2.2 per cent.
- [10]
South East house prices fell by 2.1 per cent year on year to £380,829.
- [11]
In eastern England, the average house value fell by 1.6 per cent to £330,151.
- [12]
With the UK average flat year on year while London, the South East and eastern England all fell, prices in the rest of the UK must on balance have held or risen.
- [13]
The average London home lost about £12,000 over the year, from roughly £543,500 a year earlier.
- [14]
The average South East home lost about £8,200 over the year.
- [15]
The South East average price is £150,719 below London's, about 28% less.
- [16]
Eastern England's average price is about £201,000 below London's.
- [17]
City AM reports that property experts warn the London and southern England property markets are being worst hit by rising mortgage rates and stamp duty.
Sources
2 independent publishers whose own reporting we read for this story.
- cityam.comHouse prices fall faster in London as property market stays ‘subdued’
1 article · October 6, 2026
- theguardian.comUK house prices flatline as rising mortgage costs weigh on market
1 article · October 7, 2026
Topics and entities
Topics
- Mortgage Rates
- UK monetary policy
- UK housing market
Entities
- Andy Burnham
- Lloyds house price index
- Bank of England
- Lloyds Banking Group