House prices 'downturn' warning as Lloyds HPI reveals stark North-South divide

By Liam Buckler ·

House prices could be heading for a “downturn” as experts told Newspage the latest Lloyds House Price Index (HPI) exposes a widening North-South divide.

According to the latest figures, UK house prices were flat in September.

The average UK home was worth £298,441 in September, with prices unchanged from a year earlier. 

Yet homeowners in different parts of the UK are living in completely different property worlds. In Northern Ireland, prices have rocketed 7.4% over the past year.

Scotland is up 3.4%, while the North East has recorded growth of 2.4% and the North West 1.9%.

London prices have slumped 2.2%. The South East has fallen 2.1%, while Eastern England is down 1.6%.

Rupert Collingwood, Founder at The London Broker, said it shows that buyers are keeping their money in their pockets. 

He commented: "When you measure the data across the nation the overall picture is flat, however when you look at the housing activity reported by Lloyds the real picture starts to reveal itself. Transaction volumes are down 10%, mortgage approvals are down 16% on last year and buyer enquiries and agreed sales down 17%. This is the picture we are seeing particularly in the South East. 

"Activity is subdued and reasons for this are multifaceted and vary from one price point to another, be it cost of stamp duty, cost of energy, ability to save for a deposit and so on. 

“Transaction volumes matter in any market and vendors in particular should pay attention to these numbers when considering their price, more so than any general overall house price trend, which likely bears little relation to the reality in their postcode. Buyers are keeping their money in their pockets, it is up to sellers to tempt them to get their wallets out.”

The latest figures show how London is feeling the squeeze, with some properties proving much harder to shift.

Chris Barry, Director at London-based Thomas Legal, said: “Transactions in the capital are down across two areas, the highest end of the market due to wider economic concerns, and leasehold flats due to a change in building safety regulations. 

"Supply continues to come to the market but buyers aren't registering in the same numbers. Prices will continue to drop in these areas but freehold houses remain strong and as wage growth continues to outstrip house price growth, this is set to continue.”

The flat national figure hides a growing North-South divide, according to one expert. 

Darryl Dhoffer, Founder at Bedford-based The Mortgage Geezer, added: "UK house prices held steady at £298,441 in September (0.0% monthly and annual change), with activity recovering slightly as buyer enquiries hit their highest since February. Yet, headline stability masks a widening regional split. While Northern Ireland surges ahead with annual growth at 7.4%, and Northern England and Scotland post solid gains, southern markets are feeling the squeeze. 

“Greater London leads annual declines down 2.2% (£531,548), closely followed by the South East (down 2.1%) and Eastern England (down 1.6%). On the ground, agents in the south report that higher average values amplify rate sensitivity and deposit hurdles. While overall demand is holding up, sellers must price realistically as transaction volumes remain subdued.”

Experts believe the market is looking increasingly frozen rather than stable.

Rohit Kohli, Director at Romsey-based The Mortgage Stop, said: "Prices haven't fallen off a cliff, but growth has stalled, and that's often how a downturn begins. Flat annual growth is rare. In the south it's already gone negative, with London, the South East and the East all down around 2%. The activity numbers are what worry me. Completed sales are down 3.9% over the last three months, but that's the market finishing deals agreed months ago. 

"The forward-looking figure is mortgage approvals, down 16% on a year ago, and those are tomorrow's completions. If that gap closes the wrong way, sales volumes have further to fall. That aligns with what we're seeing in Hampshire. 

"Buyers are still looking, but they're not rushing, and sales are taking longer to get over the line. Prices tell you where the market's been. Approvals tell you where it's going, and right now they're not pointing the way homeowners would hope."

For many buyers and sellers, the real problem is the rising cost of moving home.

Harry Goodliffe, Director at Winchester-based HTG Mortgages, added: "Lloyds says 0.0%, but that's the North going up and the South coming down, and the two levelling each other out.

"The problem isn't a lack of people wanting to move. It's that moving is expensive. Stamp duty on a normal family house in Hampshire runs into the tens of thousands, then add agents, solicitors, removals, and it all comes out of a budget inflation has already eaten into. 

“So buyers can't stretch to what the seller has in their head, sellers won't drop because they've got their own next move to fund, and the whole chain just grinds to a halt. I'd expect that to carry on well into next year." 

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The raw alert

The question we put to Newspage’s experts, and their answers.

Show the original alert and 13 responses

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Newspage Raw

Lloyds House Price Index out – what are the trends behind the headlines?

ended 07. October 2026

Lloyds has released its house price index this morning. Please read through it, we want to do a story that isn't just on the headline figures.

For example, London, the south-east and the east are seeing pretty heavy falls in house prices. Are you seeing that if you are based there?

  • What does the house price index show? Past the headline figure.
  • Does it track with what you are seeing on the ground in your estate agency or brokerage?
  • Does this release confirm or is it out of sync with what you're seeing on the ground?

Responses asap.

13 responses from the Newspage community

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Rupert CollingwoodVerified
Founder at The London Broker
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When you measure the data across the nation the overall picture is flat, however when you look at the housing activity reported by Lloyds the real picture starts to reveal itself.
Transaction volumes are down 10%, mortgage approvals are down 16% on last year and buyer enquiries and agreed sales down 17%. This is the picture we are seeing particularly in the South East.
Activity is subdued and reasons for this are multifaceted and vary from one price point to another, be it cost of SDLT, cost of energy, ability to save for a deposit and so on.
Transaction volumes matter in any market and vendors in particular should pay attention to these numbers when considering their price, more so than any general overall house price trend, which likely bares little relation to the reality in their postcode.

Buyers are keeping their money in their pockets, its is up to sellers to tempt them to get their wallets out.
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Chris BarryVerified
Director at Thomas Legal
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Transactions in the capital are down across two areas, the highest end of the market due to wider economic concerns, and leasehold flats due to a change in building safety regulations. Supply continues to come to the market but buyers aren registering in the same numbers. Prices will continue to drop in these areas but freehold houses remain strong and as wage growth continues to outstrip house price growth, this is set to continue.
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Ranald MitchellVerified
Director at Charwin Mortgages
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The headline is house prices, but the real story is borrowing power. London, the South East and the East are feeling the squeeze hardest because that is where high property values collide most brutally with higher mortgage rates. Buyers have not suddenly lost interest, they have simply lost capacity. When affordability falls, offers weaken and prices eventually have to follow. Falling values may sound like good news for buyers, but if mortgage costs are rising faster than prices are dropping, homes are not becoming meaningfully more affordable. This looks less like a crash and more like a market being forced back towards reality. Prices can only stay detached from incomes and mortgage affordability for so long.
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Darryl DhofferVerified
Founder at The Mortgage Geezer
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Resilience Masks a Deep North-South Divide in Lloyds' September Index

UK house prices held steady at £298,441 in September (0.0% monthly and annual change), with activity recovering slightly as buyer enquiries hit their highest since February.

Yet, headline stability masks a widening regional split. While Northern Ireland surges ahead with annual growth at +7.4%, and Northern England and Scotland post solid gains, southern markets are feeling the squeeze. Greater London leads annual declines down -2.2% (£531,548), closely followed by the South East (-2.1%) and Eastern England (-1.6%).

On the ground, agents in the south report that higher average values amplify rate sensitivity and deposit hurdles. While overall demand is holding up, sellers must price realistically as transaction volumes remain subdued.
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Dariusz KarpowiczVerified
Director at Albion Financial Advice
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Flat is not flat once you count inflation. Annual growth of 0.0% means values are sliding in real terms, and London at -2.2% and the South East at -2.1% have stopped pretending otherwise.

The real story is borrowing capacity, not appetite. With average rates around 6% and mortgage approvals down 16% on last year, buyers have not gone cold, they have simply run out of room. Southern England is where high values meet expensive debt, so that is where offers weaken first. Something has to give: rates, incomes or prices. I would not bet on the first two shifting quickly.
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Tony SanchezVerified
Founder at Bridging Loan Directory
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An unsold home can hold up more than one transaction. In Bridging Loan Directory’s Q3 reporting, P10 Financial Group described a developer whose slower West London sales left an agreed South London site purchase on hold. Money needed for the next project was still tied up in the previous one.

That is the question behind the price headlines: how long are properties taking to sell, and what does the delay prevent? For a developer, accepting a lower offer reduces the return, but waiting can mean more interest and a delayed start elsewhere.

We have also reported cases where refinancing completed homes released money for another project. That can help, but the remaining profit has to justify the extra borrowing. The effects of a slow sale can reach beyond the home still on the market.
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Rohit KohliVerified
Director at The Mortgage Stop
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Prices haven't fallen off a cliff, but growth has stalled, and that's often how a downturn begins. Flat annual growth is rare. In the south it's already gone negative, with London, the South East and the East all down around 2%.

The activity numbers are what worry me. Completed sales are down 3.9% over the last three months, but that's the market finishing deals agreed months ago. The forward-looking figure is mortgage approvals, down 16% on a year ago, and those are tomorrow's completions. If that gap closes the wrong way, sales volumes have further to fall.

That aligns with what we're seeing in Hampshire. Buyers are still looking, but they're not rushing, and sales are taking longer to get over the line. Prices tell you where the market's been. Approvals tell you where it's going, and right now they're not pointing the way homeowners would hope.
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Harry GoodliffeVerified
Director at HTG Mortgages
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Lloyds says 0.0%, but that's the North going up and the South coming down, and the two levelling each other out. London's off 2.2%, South East 2.1%, and honestly it feels like more than here in Winchester. The problem isn't a lack of people wanting to move. It's that moving is expensive. Stamp duty on a normal family house in Hampshire runs into the tens of thousands, then add agents, solicitors, removals, and it all comes out of a budget inflation has already eaten into. So buyers can't stretch to what the seller has in their head, sellers won't drop because they've got their own next move to fund, and the whole chain just grinds to a halt. I'd expect that to carry on well into next year.
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Stephen PerkinsVerified
Norwich Mortgage Broker and Managing Director at Yellow Brick Mortgages
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A flat national house price figure hides a very unflat housing market. Lloyds’ figures show a clear regional divide, with London, the South East and Eastern England all falling year-on-year while Northern Ireland, Scotland and parts of northern England are still recording meaningful growth. That suggests this is less a nationwide fall in confidence and more affordability putting greater pressure on the higher-priced parts of the country.

Higher mortgage rates inevitably bite harder where buyers need to borrow larger sums, so modest price falls in the South are not surprising. The encouraging part is that prices are adjusting without anything resembling a widespread collapse. For buyers, a slightly cheaper property does not automatically mean a more affordable purchase if borrowing costs have risen, so mortgage affordability remains just as important as the headline house price.
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Craig FishVerified
Director at Lodestone Mortgages
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Lloyds' flat national figure hides a two-speed market. London is down 2.2% on the year, the South East 2.1% and Eastern England 1.6%, while Northern Ireland is up 7.4%. Across London, the South East and the East, what I'm seeing on the ground comes down to pricing. Price it right and it sells; price it wrong and it sits on the market gathering dust. My own clients, many of them senior City professionals, are finding prices holding up for homes that are sensibly priced. So yes, this release confirms the direction of travel, but not the whole picture. Lloyds' regional figures are built on three months of mortgage approvals, so they lag the market and miss cash buyers entirely. The falls are landing hardest on sellers still clinging to an ambitious asking price. With the average five-year fix hitting 6% this week for the first time in three years, and approvals down 16% on a year ago, buyers can afford to be choosy. Any vendor who wants to move this autumn has to price for today's market.
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Richard DavidsonVerified
Mortgage Advisor at onlinemortgageadvisor.co.uk
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September's flat reading looks less like a blip and more like a long levelling out when you put it against the history. The average home now costs £298,441, barely 1.5% more than the £294,000 peak recorded in August 2022, when prices across the index have grown by an average of more than 5% a year since 1983. Over those same four years regular pay has risen by more than 20%, so in real terms homes are roughly 15% cheaper than they were at the peak.

That's the part of the story that gets lost in the headlines. It's higher mortgage rates rather than prices that are still squeezing buyers, so every cut in rates now goes further than it would have done in 2022. In London, the South East and the East, where prices are down around 2% this year, buyers with a deposit ready are in a much stronger position than they were at the peak.
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Matt CoulsonVerified
Founder at Heron Financial
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The headline is the least interesting number. Prices flat at zero sounds like stability, but transactions down 10%, approvals down 16% and enquiries down 17% tell the real story. That's a frozen market, and the flat average disguises it. Volumes matter far more than a steady headline, because they feed through to everyone who relies on moves happening. The regional split is an affordability map. The south is where rates near 6% collide with the highest prices, so borrowing capacity is stretched hardest there, which is why London and the South East are falling while the North and Northern Ireland hold up. It's the same rate environment having very different effects depending on where values started. And flat in cash terms, with inflation above 3%, means prices are drifting down in real terms, a slow correction without a crash. Does it match the ground? Yes. People can buy in principle but hesitate at the monthly cost, and the market stays stuck until that cost genuinely eases.
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Jamie ElvinVerified
Director at Strive Mortgages
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A flat national figure can hide a very uneven market. The weakness in London, the South East and the East raises a bigger question: are homes becoming more affordable, or are prices simply adjusting to what buyers can borrow? My view is that mortgage affordability remains the key pressure. A cheaper property doesn’t automatically mean a manageable monthly payment, particularly in areas where buyers already need large mortgages. There’s also an overlooked opportunity for homeowners trading up. A falling market can reduce the cash gap between their current home and the next one. But that only helps if they can afford the additional borrowing. The national headline tells sellers very little about what their own home will achieve. Local competition and buyers’ budgets matter far more. Sellers can hold out for yesterday’s price, but buyers have to work with today’s mortgage payment.