"At first glance, these figures look disappointing with Halifax reporting annual house price growth softening in May."
On a monthly basis, prices rose by 1.5% in May, partially reversing the 3.1% monthly decline seen in April.
Russell Galley, managing director at Halifax, said: “House prices grew by 1.5% on a monthly basis, in contrast to a decline seen in April. The month on month figures are more volatile than the quarterly or annual measures. In the three months to May house prices were 0.2% higher than the previous quarter and on an annual basis they are 1.9% higher. Both of these measures have fallen since reaching a recent peak, in the final months of last year.
“These latest price changes reflect a relatively subdued UK housing market. After a sharp rise in January, mortgage approvals have softened in the past three months, whilst both newly agreed sales and new buyer enquiries are showing signs of stabilisation having fallen in recent months.
“The continuing strength of the labour market is supporting house prices. In the three months to March the number of full-time employees increased by 202,000, the biggest rise in three years. We are also seeing pay growth edging up and consumer price inflation falling, and as a result the squeeze on real earnings has started to ease. With interest rates still very low we see mortgage affordability at very manageable levels providing a further underpinning to prices.”
Jeremy Leaf, north London estate agent and former RICS residential chairman, commented: "At first glance, these figures look disappointing with Halifax reporting annual house price growth softening in May.
"Once again we are seeing the rather topsy turvy pattern to the housing market - up one month, down the next. It is the same on the ground - no real pattern, with buyers and sellers negotiating hard but not always successfully. Looking forward, we expect more of the same and possibly slightly better as we await figures reflecting the crucial spring market period."
Mike Scott, chief property analyst at Yopa, added: "This month’s index confirms a slight softening of the housing market, with the annual rate of growth falling to 1.9 per cent. April’s big monthly fall has partly been reversed, suggesting that the bad weather in March played a large part.
"The fundamentals of the market are still strong, with tight supply, strong employment figures, average wages rising faster than inflation and continuing low mortgage interest rates. We are unlikely to see much more of a turndown in prices unless those economic fundamentals change.
"However, both supply and demand are subdued compared with last year, and we may see a lower total number of house sales in 2018 than in recent years."
