House prices fell -0.1% in May, following a similar decline of -0.1% in April according to the latest Halifax House Price Index.
The average property price is now £298,806 compared to £299,251 in April Annual growth rose slightly to +0.5%, from +0.4% in April
Northern Ireland continues to record strongest annual growth in the UK at +7.8%
Commenting on the latest figures, Amanda Bryden, Head of Mortgage at Halifax, said: “Property price trends continue to reflect the uncertainty associated with developments in the Middle East. Despite recent cuts in mortgage interest rates, high inflation expectations have kept borrowing costs above the level seen at the start of the year, continuing to pressure the affordability of many buyers and reducing demand.
“However, overall activity remained good, reflecting the underlying resilience of the UK housing market. The latest industry figures show that transaction levels remain relatively stable, suggesting that buyers and sellers are still on the move.
“Among first-time buyers, annual growth was more subdued at +0.3%. While getting onto the property ladder remains a significant challenge, there has been increasing support from lenders, including more flexible affordability checks and a growing range of low deposit options.
Bryden added: “Borrowing costs and consumer confidence are likely to continue to shape activity in the coming months, with house prices expected to remain broadly stable while interest rates remain high. The housing market remains closely linked to wider global developments, with a return to sustainable growth in house prices dependent on improving inflation expectations and lower mortgage costs.”
Ian Futcher, financial planner at Quilter, commented: “The Bank of England has held interest rates on hold for now, but the outlook remains uncertain. Much will depend on how the situation in the Middle East develops and what that means for inflation and energy prices. Any sustained pressure here may force policymakers to rethink their course.”
“For now, we can expect the housing market to remain weak. High energy costs continue to weigh on household budgets and affordability will rise increasingly, dampening consumer sentiment further. Furthermore, while mortgage interest rates have eased slightly from the peak seen earlier in the year as lenders work harder to attract a limited pool of buyers, they remain high and we can expect them to be so for some time yet.
“This is likely to keep house price growth in check over the coming months. Buyers have become increasingly price sensitive with rising borrowing costs and broader financial pressures, meaning any upward movement in prices will likely be modest,” he concluded.
From an estate agents perspective, Jeremy Liff, a London estate agent and former chairman of Rex Residential, said: “Viewings, listings and even agreed sales may be holding up relatively well, but the difficulty of getting commitment due to concerns about the Iranian conflict affecting the cost of living is beginning to show itself.
“Most buyers take their time to try to be as sure as possible that they have found the right place and are not overpaying. As a result, prices fluctuate slightly and transactions take longer to complete, increasing the decline. However, we find that some stability will certainly increase confidence in the medium to long term.”
