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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 stands at £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.”
Amy Reynolds, head of sales at Antony Roberts, said: “The ongoing resilience of the housing market, despite continued economic uncertainty, is evident.
“The flight to quality continues to be a feature, with buyers more selective and price-sensitive but continuing to transact where values align with lifestyle.
“High mortgage rates have cooled the market somewhat but demand remains underpinned by low supply in some areas. The key challenge is affordability – mortgage rates, higher stamp duty and for some, the increase in private school fees, is affecting many families who would like to move but are unable to.”
Tom Bill, head of UK residential research at Knight Frank, stated: “Demand was frontloaded this year thanks to April’s stamp duty deadline, which means house prices are coming under downwards pressure as buyers still in the market have a lot to choose from. While activity will eventually pick up, concerns around inflation and the government’s tight financial headroom mean mortgage rates don’t feel poised to drop meaningfully. We expect UK growth of 3.5% in 2025, which suggests the direction of travel for prices will be largely sideways.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “The significant number of purchases brought forward to take advantage of the stamp duty holiday ending in March is still having a negative impact on activity now.
“Most of the stock made available at that time, if not sold or under offer, is still available so the inevitable result is a softening in prices.
“However, sales are still proceeding where buyers and sellers are most realistic, with confidence supported by a relatively strong employment picture outweighing economic concerns both here and abroad.”
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.”
Iain McKenzie, CEO of The Guild of Property Professionals, remarked: “Today’s Halifax HPI, indicating a marginal 0.4% monthly decline in average property prices, is largely in line with expectations and highlights the underlying stability we’re observing in the market.
“Following the anticipated recalibration in April after the March stamp duty rush, it’s encouraging to see how resilient prices have been. A minor dip of this scale was widely predicted, and the fact that it wasn’t more significant is a testament to the market’s firm footing. This resilience is underpinned by a confluence of positive factors, such as the recent welcome interest rate cut, providing a tangible boost to borrowers, and robust economic fundamentals. The stronger-than-expected 0.7% GDP growth in Q1 certainly paints a more optimistic backdrop.
“While the recent uptick in inflation has tempered expectations for further rapid rate cuts, the key fundamentals supporting homebuyers remain strong – low unemployment, rising real earnings, and the continued anticipation of easing borrowing costs in the medium term.
“The sharp drop in transactions from March to April was an expected consequence of the stamp duty deadline passing, but signs of stabilisation are already evident. Many agents are reporting encouraging levels of activity, and the Bank of England’s mortgage approval figures, though slightly down on March, remain robust and point to a stable bedrock of buyer demand.
“Crucially, the market’s overall stability is fostering buyer confidence. With reports, like Zoopla’s, indicating that a very high percentage of homes are still achieving their asking price, it’s clear that buyer motivation is strong. This marginal price adjustment, when viewed alongside these supportive conditions, reinforces our positive outlook for the housing market as we move through 2025.
Jason Tebb, president of OnTheMarket, noted: “Although the stamp duty concession and the impetus it brought is behind us, the housing market continues to demonstrate remarkable resilience, shaking off external economic concerns.
“Recent base rate cuts have been fundamental in boosting confidence and activity. Further rate reductions from the Bank of England will provide much-needed stimulus for the market as the year progresses.
“As property prices remain relatively steady, affordability continues to impact what buyers are able or willing to pay. Relaxing of criteria by lenders following recent guidance from the Bank may enable borrowers to take on bigger mortgages but evidence suggests that for now at least they remain sensitive on price.”
Jonathan Hopper, CEO of Garrington Property Finders, commented: “Halifax’s figures reveal a market that is listless rather than limping. Price growth and buyer demand are both strong in some areas, but overall the picture is mixed and Halifax’s data reflect this.
“In large part this is a legacy of the distorting effects of the Stamp Duty deadline, which sucked up huge numbers of would-be buyers who would ordinarily have been buying this summer.
“Thousands of sales were rushed through in the first three months of the year, and HMRC data show the number of completed sales shrank by 63.5% between March and April. While transactions have since picked up, the market is still settling.
“But May’s dip in average prices is also a nod to what a buyer’s market this has become. The number of homes for sale is high relative to the number of buyers, and in many areas estate agents have so many properties already on their books that they are encouraging sellers to reduce their asking price.
“In some cases agents are even refusing to list homes where they feel the owner is asking for an unrealistic price.
“For sellers with the ‘will’ to move this summer, recalibrating their asking price is the ‘way’ to get moving in today’s highly price-sensitive market.
“This is holding back average prices in London and the South West of England, where asking prices are being trimmed as second home owners sell up and some of those who moved to the region during the post-pandemic ‘race for space’ reassess their priorities.
“By contrast Northern Ireland, Wales and Scotland are all recording stronger price growth than England, as the balance between supply and demand there is more even, and buyers are more willing to stretch their budgets as they see prices as being very good value.
“With mortgage interest rates levelling off after several months of gradual falls, the market is settling rather than surging into summer.”
Tom Brown, managing director, real estate at Ingenious, said: “Today’s data underscores the continued resilience and appeal of the UK property sector. Despite elevated inflation and stubborn borrowing costs, we welcome the BoE’s recent rate cut as a hopeful first step in a much-needed easing cycle.
“There’s clearly a significant and notable shortage of housing inventory across various price brackets and locations. Consequently, any decline in homeowner sales is likely counterbalanced by increased demand from renters and investors. This is a trend that is not going away. However, it’s crucial to recognise that the situation isn’t consistent nationwide or across different property pricing brackets. It’s helpful to delve into subsectors and regional dynamics when assessing opportunities, as a broad market view can be misleading. In the real estate sector, we’re seeing significant investment capital for assets for long-term rental. On account of their scale and buying power, these typically institutional investors face fewer disruptions than owner occupiers or small-scale Buy-to-let investors.
“At Ingenious, we continue to work closely with borrowers and investors, adapting to the dynamic market landscape and broader economic shifts, including those related to the climate crisis and changing lifestyles. We are expanding the reach of our development lending product to provide extended stabilisation terms for specialised developers in the rental sector. Furthermore, we’re introducing special lending terms for developers focused on reducing embedded carbon in their construction practices.”
Jonathan Handford, managing director at Fine & Country, commented: “House prices saw a modest decline in May, reflecting the market’s ongoing adjustment after a transitional start to the year.
“This slight month-on-month dip follows the stamp duty changes introduced in April and comes just ahead of the typically quieter summer period, when many families pause moving plans to focus on holidays and school breaks.
“Although economic pressures continue to impact personal finances, with inflation at 3.5% and household budgets feeling the squeeze, the Bank of England’s May rate cut to 4.25% has offered some welcome relief. While mortgage rates remain relatively high, any further easing in borrowing costs could help reignite market activity.
“Mortgage approvals fell in April as demand naturally cooled after the stamp duty tax break ended, and tighter lending criteria and deposit requirements still pose challenges for many buyers, particularly first-time purchasers. However, steady wage growth is providing some support, even if affordability remains a hurdle.
“Regional variations continue to shape the market landscape. While some areas have seen sharper price adjustments, others are stabilising or experiencing more gradual declines – creating promising opportunities for buyers ready to take action.
“Overall, May’s price movement highlights ongoing headwinds but also points toward potential for recovery. The recent flurry of transactions would have been welcomed by sellers and a quieter period was always to be expected.
“A sustained upturn will rely on broader economic improvements and targeted efforts to enhance affordability, fostering a healthier and more balanced housing market in the months ahead.”
Holly Tomlinson, financial planner at Quilter, added: “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.”
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