UK house price data for May has just been released by Halifax revealing a fall in the average value of a property in the UK.
House prices fell by an average of 0.4% in May compared with a rise of 0.3% in April The average property price now £296,648 compared to £297,798 last month.
The annual rate of growth has slowed to 2.5% from 3.2% in April. Overall house prices have remained stable so far this year.
House price growth across Northern Ireland, Wales and Scotland continues to outpace English regions.
Northern Ireland once again recorded the fastest pace of annual property price inflation, up by 8.6% over the past year. The typical home now costs £209,388, though prices remain well below the UK average.
Wales and Scotland also posted strong annual growth of +4.8% in May. Average prices now stand at £230,405 and £214,864 respectively.
Among the English regions, the North West and Yorkshire and the Humber lead the way, both showing annual house price growth of +3.7%. Average property values in these areas are now £240,823 and £213,983 respectively.
In contrast, London continues to see more subdued growth, with prices rising by just +1.2% year-on year. However, the capital remains by far the most expensive part of the UK housing market, with the average home now priced at £542,017.
Amanda Bryden, head of mortgages, Halifax, said: “Average UK house prices fell by -0.4% in May – a drop of around £1,150 – following a modest rise in April. Over the past 12 months, prices have grown by +2.5%, adding just over £7,000 to the value of a typical home, which now stands at £296,648.
“These small monthly movements point to a housing market that has remained largely stable, with average prices down by just -0.2% since the start of the year. The market appears to have absorbed the temporary surge in activity over spring, which was driven by the changes to stamp duty.
“Affordability remains a challenge, with house prices still high relative to incomes. However, lower mortgage rates and steady wage growth have helped support buyer confidence.
“The outlook will depend on the pace of cuts to interest rates, as well as the strength of future income growth and broader inflation trends. Despite ongoing pressure on household finances and a still-uncertain economic backdrop, the housing market has shown resilience – a story we expect to continue in the months ahead.”
Industry reactions:
Professor Joe Nellis, co-creator of the Halifax House Price index and economic adviser at MHA, said: “The Halifax House Price Index has recorded a surprising 0.4% dip in UK house prices in May. However, year-on-year growth remains strong, with the annual growth rate coming in at 2.5%. This comes as rising wages is pushing affordability up and greater competition in the mortgage market is leading to more favourable rates.
“This growth is set to continue as huge demand for houses persists in the UK. This is something that the Government has recognised, setting an ambitious target to build 1.5 million new homes by 2029, but recent estimates suggest that this is looking overly optimistic.
“One thing to consider over the next year is the Renters’ Rights Bill introduced to Parliament by Angela Rayner in her role as Secretary of State for Housing. Expected to pass in the Autumn, this Bill will provide greater protection for tenants and impose new restrictions on landlords, including ending ‘no fault’ evictions.
“These new restrictions could disincentivise landlordism, encouraging the sale of rental properties and increasing supply, or discouraging potential landlords from buying properties and reducing demand. Both scenarios would apply downward pressure on prices and provide some respite for would-be homeowners.
Matt Thompson, head of sales at Chestertons, said: “Some house hunters paused their search amid the Easter holidays in April but were quick to resume their activity in May. Buyer motivation was then boosted further by the Bank of England’s decision to cut interest rates to 4.25%. As the majority of sellers have been eager to move themselves, there has been a steady flow of agreed sales in May and, as buyer demand remains strong, we expect a busier than usual summer market.”
Nathan Emerson, CEO at Propertymark, commented: “This slight dip in house prices will likely have been influenced as a direct consequence to the current state of the global economy. There will always be a need for people to move house regardless of international trading relations; however, many aspiring or current homeowners will no doubt be discouraged until they feel confident in their long-term affordability.
“It would be very welcome news for consumers if lenders do feel confident enough to offer additional competitive mortgage products across the summer months, but much will depend on the rate of inflation across the coming months.”
Holly Tomlinson, financial planner at Quilter, “The latest Halifax House Price Index shows that UK house prices fell by 0.4% in May, with the average property now valued at £296,648. However, prices were still up by 2.5% compared to this time last year, suggesting that while activity has slowed, the market remains surprisingly robust.
“Following the end of the temporary stamp duty thresholds in April, the housing market saw a clear shift in momentum. Buyers rushed to complete transactions in March to avoid higher tax bills, but activity cooled noticeably in April, as shown by the Bank of England’s latest mortgage approval figures. Despite this drop in demand, house prices have not fallen off a cliff.
“The fact that prices fell only modestly in May indicates that supply remains constrained and sellers have not yet been forced to adjust their expectations. However, with affordability still stretched and borrowing costs relatively high, the risk of a more prolonged slowdown cannot be ignored.
“Mortgage rates are edging down slightly , but for many buyers, this remains a far cry from the ultra-low rates of recent years. For those coming to the end of a fixed deal, the jump in monthly repayments can be significant, adding to the financial strain.
“Looking ahead, market confidence will likely hinge on the timing and pace of interest rate cuts. A more meaningful pick-up in buyer demand may not materialise until there is clearer evidence that mortgage costs are on a sustained downward path. For now, the market appears to be pausing for breath after a frenetic start to the year.”
This article is currently being updated
