Mortgage lender Halifax said on a monthly basis average home prices were flat in May, having dropped by 0.4 per cent in April
UK house prices in May declined by 1 per cent on an annualised basis, the first drop since December 2012.
Mortgage lender Halifax said on a monthly basis average home prices were flat in May, having dropped by 0.4 per cent in April.
The typical UK property now costs £286,532, compared with £286,662 in April.
Given the effectively flat month, the annual drop generally indicates a comparison with strong home prices this time in 2022, as the market stayed buoyant heading into the summer, stated Kim Kinnaird, director at Halifax Mortgages.
Property prices have now dropped by nearly £3k over the past 12 months and are nearly £7,500 lower from the peak in August. But prices are still £5k higher since the end of 2022, and £25k higher than the level of two years ago, Kinnaird said.
Southern Britain again fared worst, with prices continuing to decline on an annual basis across the region.
Prices in the South East were down 1.6 per cent in May this year compared with 2022, while prices in the South West were down 1.4 per cent.
In London, prices were down 1.2 per cent in May, compared with a year before and the average price of a home in the capital was £536,622.
On an annualised basis, the best performing UK region was the West Midlands where prices increased by 2.7 per cent in May, bringing the value of the average home to £251,137.
Halifax added that the value of existing homes continued to drop, declining 1.9 per cent in May. Nevertheless, prices for new-build properties increased by 2.8 per cent on an annualised basis, even though that was the slowest rate of growth for around three years.
Overall, the Halifax stated the UK housing market was slowing down and home prices would drop further in the face of high inflation and the possibility of further hikes to interest rates.
With consumer price inflation continuing to be stubbornly high, markets are pricing in a number of more rate hikes that would take Base Rate beyond 5 per cent for the first time since the start of 2008, Kinnaird added.
Those expectations have led fixed mortgage rates to start rising again across the market, she said.
This will inevitably affect confidence in the housing market as buyers and sellers adjust their expectations, and latest industry figures for mortgage approvals as well as completed transactions show demand is cooling, Kinnaird added.
Thus further downward pressure on home prices is still anticipated, she said.
One ongoing source of support to house prices is the labour market. While unemployment has recently risen from very low levels, quick wage growth would over time help to enhance housing affordability, if sustained, Kinnaird said.