UK house prices fell by an average of £1,150 (0.4%) in May compared to April, according to the latest Halifax House Price Index. This follows a 0.3% rise the previous month.

Despite the recent dip, average property values have still grown by over £7,000 in the past year, with the average home now costing £296,648. Annual house price growth slowed to 2.5% in May, down from 3.2% in April.

This report contrasts with Nationwide’s data, which recorded a 0.5% increase in house prices for May after a 0.6% fall in April.

Stable market, lingering affordability challenges

Amanda Bryden, head of mortgages at Halifax, described the housing market as “largely stable,” with prices down just 0.2% since January. She noted that affordability remains tight due to high price-to-income ratios, though steady wages and lower mortgage rates are helping support buyer confidence.

The outlook, she said, depends on future interest rate cuts and income growth.

Impact of stamp duty changes

Stamp duty relief was reduced in April, which caused a rush of activity in March. HMRC figures show housing transactions dropped sharply to 64,680 in April – 64% lower than March’s total of 177,440.

Tom Bill of Knight Frank said this front-loaded demand led to more choice for remaining buyers, putting downward pressure on prices. He predicts relatively flat price movement until mortgage rates fall significantly.

Regional trends

Halifax said that house price growth in Northern Ireland, Wales, and Scotland is outpacing most English regions. London remains the UK’s most expensive housing market, with the average home priced at £542,017 – up just 1.2% year-on-year.