"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"
- Amanda Bryden - Halifax
UK house prices were broadly flat in May, with a 0.1% monthly fall matching the decline recorded in April, according to Halifax. The average property now costs £298,806, while annual growth edged up slightly to 0.5% from 0.4% the previous month.
"Average house prices remained broadly stable in May, with a slight fall of -0.1% matching that seen in April," said Amanda Bryden, head of mortgages at Halifax. "The typical property now costs £298,806, while the pace of annual growth edged up slightly to +0.5%.
"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 remain 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."
National and regional breakdown
The regional picture remains sharply divided. Northern Ireland continues to lead the UK for annual house price growth, with prices up 7.8% over the past year to £227,177, supported by limited supply and relative affordability.
Scotland also posted a strong annual growth of 3.8%, taking the average price to £222,650. Wales, by contrast, has seen growth slow to just 0.1% annually, with typical values at £230,355.
Within England, northern regions are outperforming. The North East recorded annual growth of 3.1% to £181,703, and the North West grew 3.0% to £248,304. Southern markets continue to soften, with London values down 1.5% year-on-year to £534,375 and the South East falling 2.1% to £382,704, the steepest regional decline.
Industry figures broadly echoed Halifax's assessment, though some pointed to underlying momentum despite the subdued headline numbers.
Industry reactions
"The housing market has become a marathon rather than a sprint, but buyers are still crossing the finish line," said Marc von Grundherr, director of Benham and Reeves. "Whilst we're not seeing the consistently strong monthly rates of growth seen in previous years, house prices continue to strengthen on an annual basis and market activity remains remarkably resilient."
Verona Frankish, CEO of Yopa, drew a distinction between a cooling market and a cold one. "A cooling market isn't the same as a cold market," she said.
"Whilst house prices have remained largely flat in recent months, the fact that mortgage approvals have climbed to their highest level in more than a year tells us that buyers are still very much engaged. Stability may not grab the headlines, but it's exactly what the market needs after a prolonged period of volatility."
Negotiating dynamics are shifting, according to Chris Hodgkinson, managing director of House Buyer Bureau. "The biggest gap in today's market isn't between supply and demand, it's between buyer budgets and seller expectations," he said.
"Buyers are continuing to move, but they're negotiating harder than they have for years and they're unwilling to overpay. Sellers who remain anchored to yesterday's market values risk spending longer on the market and accepting a lower offer further down the line."
Nathan Emerson, CEO of Propertymark, pointed to the broader affordability context. "A dip in house prices both month on month and quarterly highlights the ongoing impact of affordability pressures on buyer behaviour, particularly as many households continue adjusting to higher mortgage repayments and wider cost-of-living concerns," he said.
"Although demand has moderated, the market remains active, where sellers are willing to align pricing with local conditions. Buyers are becoming more selective, and professional guidance is increasingly important in helping transactions progress smoothly."
Tom Bill, head of UK residential research at Knight Frank, said, “The seasonal spring bounce in the property market has fallen flat this year. Prices and transaction volumes have been squeezed by higher mortgage rates due to the Middle East conflict and the inflation signals suggest that borrowing costs won’t drop meaningfully in the short term.
"Uncertainty around the political direction of the government and whether any future Chancellor could raise taxes further may also keep demand in check, which means we expect minimal UK house price growth of 1.5% this year.”
