House prices were steady in May despite broader market uncertainty, the latest Halifax house price index shows.
House prices edged down 0.1% in May, following a similar 0.1% fall in April. However, annual growth rose slightly to 0.5%, from 0.4% in April.
As has been the case for many months, property prices continue to vary significantly by region and nation, with stronger growth in the North and more subdued conditions in the South.
Northern Ireland continues to lead UK annual house price growth, driven by a limited supply of available properties, along with relative affordability compared to some other regions. Average prices are up 7.8% over the past year to £227,177, which is the highest rate of annual growth in the last six months.
Scotland also recorded strong annual growth, now at 3.8%, while Wales has seen property price growth continue to slow, now 0.1% on annual basis.
In England, stronger price growth remains concentrated in northern regions. The North East saw prices rise 3.1% over the year to £181,703, while the North West recorded annual growth of 3.0%, with the average home now costing £248,304.
By contrast, southern markets continue to see prices fall. The South East led declines, with prices down 2.1% year on year to £382,704, while London saw average values fall by 1.5% to £534,375.
Amanda Bryden, head of mortgages at Halifax, said: “Property price trends continue to reflect the uncertainty linked to developments in the Middle East. Despite recent cuts to mortgage rates, higher inflation expectations have kept borrowing costs above the level seen at the start of the year, continuing to stretch affordability for many buyers and temper demand.
“Even so, overall activity has held up well, reflecting the underlying resilience of the UK housing market. Latest industry figures show transaction levels remain relatively stable, suggesting buyers and sellers are still moving.
“Among first time buyers, annual growth is more subdued at 0.3%. While getting onto the property ladder remains a big challenge, there has been increasing support from lenders, including more flexible affordability checks and a growing range of low deposit options.
“Looking ahead, borrowing costs and consumer confidence are likely to continue shaping activity in the coming months, with house prices expected to be broadly stable while interest rates stay elevated. The housing market remains closely tied to wider global developments, with a return to sustained house price growth dependent on an improvement in the inflation outlook and a fall in mortgage costs.”
Jason Tebb, president of OnTheMarket, commented: “Despite political uncertainty and challenging economic conditions, needs-driven buyers and sellers who may have delayed making moving decisions last year are focused on transacting. While affordability concerns remain, easing mortgage rates are helping focus minds, with borrowers adapting to shifting market conditions and securing cheaper rates while they are available.
"Little movement in average house prices suggests buyers and sellers are adopting a pragmatic outlook and adjusting expectations, rather than a loss of confidence. Steadier prices are better as far as those trying to get on the ladder for the first time are concerned, as there is less risk of being priced out further, although Halifax notes that their numbers are a little subdued.
"This is the strongest buyers’ market we have seen in many years, with plenty of stock to choose from.”
Karen Noye, mortgage expert at Quilter, added: “Seasonally, this is typically a period where activity holds up reasonably well, but momentum can become more uneven as the summer progresses. As the holiday season takes hold and attention shifts from new homes to holidays, we often see a further softening in demand, particularly through July and August.
“The Bank of England has held rates for now, and attention is increasingly turning to the June decision, where policymakers are widely expected to keep rates unchanged again. However, the outlook remains uncertain. Ongoing tensions in the Middle East leaves the Bank navigating a narrow path, with limited room to signal a clear direction for rates while pressures persist.
“For now, the housing market is likely to remain on a subdued footing. While mortgage rates have edged down from their recent highs as swap rates have stabilised, the improvement has been gradual rather than decisive and borrowing costs remain elevated by recent standards.
“That continues to weigh on affordability. Buyers are having to balance higher mortgage repayments alongside wider pressures on household finances, which is taking some of the heat out of demand and keeping activity levels in check.”
