First annual fall in house prices for 11 years

The average house price saw no change (0.0%) in May, following a drop of 0.4% in April, Halifax reports.

Its latest house price index does, however, show that the annual rate of house price growth saw a decline of -1%, compared to a 0.1% increase in April.

This marks the first annual fall in house prices since December 2012, when it was -0.1%.

Current average cost of a UK property

Halifax says the current average cost of a UK property is £286,532, slightly lower than April’s £286,662.

And while detached homes continue to demonstrate a slight increase in house prices, it is properties in the south of England that are facing the most significant pressure on their values.

Kim Kinnaird, the director of Halifax Mortgages, said: “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.

“But prices are still £5,000 up since the end of last year, and £25,000 above the level of two years ago.

“As expected, the brief upturn we saw in the housing market in the first quarter of this year has faded, with the impact of higher interest rates gradually feeding through to household budgets, and in particular those with fixed rate mortgage deals coming to an end.”

‘All signs are pointing south for the property market’

Sarah Coles, the head of personal finance at Hargreaves Lansdown, said: “All signs are pointing south for the property market. Prices are down in a year, and although they remained flat in May, this is the first month that the Halifax has measured annual falls.

“Unfortunately for sellers, this reflects the weakness that had crept into the market before the impact of higher rates had been passed onto Halifax customers – which is happening today.

“It means the pain is unlikely to be over yet.”

She adds: “There were some very small rises in mortgage rates at this stage, but nothing to frighten the horses, so it’s unlikely to have been mortgage rates driving the fall in house prices in May. Instead, it owes a great deal to the fall in demand.”

‘Reflect activity from a few months ago’

Jeremy Leaf, a north London estate agent and a former RICS residential chairman, said: “Halifax, like the Nationwide figures, exclude cash sales and reflect activity from a few months ago.

“However, they do confirm recent trends that tentative market recovery is being threatened by the prospect of more interest rate rises and stubbornly high inflation.”

He added: “However, the survey shows prices are still considerably above where they were two years ago, so cash and equity-rich buyers in particular are recognising the opportunities.

“Many mortgage holders too will be relieved that their lenders built in a buffer of at least 2 or 3 percentage points at the outset, provided of course their circumstances have not substantially changed.”

‘House prices are holding steady’

Nathan Emerson, Propertymark’s chief executive, said: “House prices are holding steady, and we are in a sturdy market.

“Propertymark data has found a 70% increase in properties available for sale compared to April 2022, showing confidence from sellers, and giving buyers more choice and room for negotiation.”

Mark Harris, the chief executive of mortgage broker SPF Private Clients, said: “Lenders continue to increase their mortgage rates, pulling products with little or no notice in response partly to funding costs and in response to what other lenders are doing.

“This will inevitably impact what buyers can afford and, in some cases, they may put decisions on hold until the situation improves.”

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