House prices fall again – Halifax

The UK’s house prices slipped by 0.1% in May, with London and the South East leading the way in the second monthly fall in a row, Halifax reveals.

The average home now costs £298,806, down from £299,251 in April, while annual growth edged up from 0.4% to 0.5%.

The lender’s head of mortgages, Amanda Bryden, said: “Property price trends continue to reflect the uncertainty linked to developments in the Middle East.

“Despite recent cuts to mortgage rates, higher inflation expectations have kept borrowing costs above the level seen at the start of the year, continuing to stretch affordability for many buyers and temper demand.”

Housing market is resilient

She continued: “Even so, overall activity has held up well, reflecting the underlying resilience of the UK housing market.

“Latest industry figures show transaction levels remain relatively stable, suggesting buyers and sellers are still moving.

“Among first-time buyers, annual growth is more subdued at +0.3%.”

Halifax is predicting that house prices will remain ‘broadly’ stable and interest will be ‘elevated’.

Regional house price rises

The data shows that Northern Ireland recorded the strongest annual growth, with average prices up 7.8% over the year to £227,177.

Halifax said growth there was being driven by limited supply and relative affordability compared with some other areas.

Scotland also saw annual growth of 3.8%, taking the average property price to £222,650.

In Wales, annual growth slowed to 0.1%, leaving the typical home value at £230,355.

In England, higher annual growth remained concentrated in the North.

The North East saw prices rise by 3.1% over the year to £181,703, while the North West recorded annual growth of 3%, taking the average property price to £248,304.

The South East saw prices fall by 2.1% year-on-year to £382,704, while London values were down 1.5%, taking the average property price in the capital to £534,375.

Property sector reacts to Halifax house price data

Nathan Emerson, the CEO of Propertymark, said: “A dip in house prices both month on month and quarterly highlights the ongoing impact of affordability pressures on buyer behaviour, particularly as many households continue adjusting to higher mortgage repayments and wider cost-of-living concerns.”

Iain McKenzie, the CEO of The Guild of Property Professionals, said: “Buyers are navigating a complex environment, with geopolitical tensions, inflationary pressures and higher borrowing costs all weighing on confidence.

“However, committed movers are still transacting, reflected in sales agreed running ahead of last year and mortgage approvals remaining close to long-term averages.”

Marc von Grundherr, a director of Benham and Reeves, said: “The housing market has become a marathon rather than a sprint, but buyers are still crossing the finish line.

“Whilst we’re not seeing the consistently strong monthly rates of growth seen in previous years, house prices continue to strengthen on an annual basis and market activity remains remarkably resilient.”

Verona Frankish, the CEO of Yopa, said: “A cooling market isn’t the same as a cold market.

“Whilst house prices have remained largely flat in recent months, the fact that mortgage approvals have climbed to their highest level in more than a year tells us that buyers are still very much engaged.”

Jeremy Leaf, a north London estate agent and a former RICS residential chairman, said: “Viewings, listings and even agreed sales may be holding up relatively well but the difficulty in obtaining commitment due principally to worries over the Iran conflict impacting the cost of living, is starting to make itself felt.

“Most buyers are taking their time to try to ensure as far as possible they have found the right place and are not overpaying.”

Tom Bill, the head of UK residential research at Knight Frank, said: “The seasonal spring bounce in the property market has fallen flat this year.

“Uncertainty around the political direction of the government and whether any future Chancellor could raise taxes further may also keep demand in check, which means we expect minimal UK house price growth of 1.5% this year.”