House prices stayed mostly flat in the month of May, with annual house price growth falling by 1%, according to Halifax.

We’ve seen phenomenal house price growth in the last few years, but now the situation is changing. House prices remained mostly static in May. The lender previously revealed that annual house price growth went up by 1% in April.

‘House prices were largely unchanged in May, edging down very slightly (-£130) compared to April, with the average UK property now costing £286,532,’ says Kim Kinnaird, Director Halifax Mortgages. ‘More notably, the annual rate of growth fell to -1.0%, marking the first time since 2012 that house prices have fallen year-on-year. Given the effectively flat month, the annual decline largely reflects a comparison with strong house prices this time last year, as the market continued to be buoyant heading into the summer.

‘Property prices have now fallen by about £3,000 over the last 12 months and are down around £7,500 from the peak in August,’ adds Kim. ‘But prices are still £5,000 up since the end of last year, and £25,000 above the level of two years ago.’

Brief upturn in housing market

Halifax says that the brief upturn we saw in the housing market in the first quarter of this year was expected to fade. Higher interest rates have had an impact on household budgets, according to the lender. Those with fixed-rate mortgage deals coming to an end may have concerns.

‘With consumer price inflation remaining stubbornly high, markets are pricing in several more rate rises that would take the base rate above 5% for the first time since the start of 2008,’ adds Kim. ‘Those expectations have led fixed mortgage rates to start rising again across the market.

‘This will inevitably impact confidence in the housing market as both buyers and sellers adjust their expectations, and the latest industry figures for both mortgage approvals and completed transactions show demand is cooling. Therefore further downward pressure on house prices is still expected.’

Falling house prices

Prices continue to fall annually across southern England, with the South East showing a 1.6% annual dip, closely followed by the South West, which is showing a 1.4% annual reduction in prices.

However, Wales hasn’t seen a price dip, with prices up by 1.1% on average. According to Halifax, West Midlands remains the best-performing region, with annual growth of  2.7%, followed by Yorkshire and Humberside, showing annual growth of 2.3%.

If you are due to remortgage this year or you’re thinking of moving house, we’re here to help with advice.

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