The UK housing market experienced another slight setback in May, with Halifax reporting a second consecutive monthly decline in house prices. Although the decrease was relatively modest, it highlights the ongoing challenges facing buyers and sellers as economic uncertainty continues to influence market sentiment.
According to Halifax’s latest house price data, average property values fell by 0.1% during May. This brought the average UK house price down from £299,251 in April to £298,806. While the monthly change was small, it marks another month of downward movement following an earlier decline, suggesting that price growth remains under pressure.
Despite the monthly fall, annual house price growth edged slightly higher. Halifax reported that prices were 0.5% higher than they were a year ago, compared with annual growth of 0.4% recorded in April. This indicates that while short-term momentum has weakened, house prices continue to show modest year-on-year resilience.
Amanda Bryden, Head of Mortgages at Halifax, said the housing market is continuing to feel the effects of wider economic uncertainty. She pointed to ongoing developments in the Middle East as one of the factors influencing consumer confidence and market conditions.
Although mortgage rates have eased in recent months, buyers are still facing affordability challenges. Inflation expectations remain elevated, which has helped keep borrowing costs higher than they were at the beginning of the year. For many prospective purchasers, this continues to place pressure on household budgets and limit buying power.
These affordability concerns are having a noticeable impact on demand. Buyers are becoming increasingly cautious when making purchasing decisions, often taking longer to commit and negotiating more aggressively on price. As a result, market activity remains steady but measured.
However, Halifax believes the housing market has demonstrated a degree of resilience despite these headwinds. Recent industry data shows that transaction levels have remained relatively stable, suggesting that buyers and sellers are still willing to proceed with moves where necessary.
This resilience is particularly evident among those who need to move due to changing personal circumstances, such as growing families, job relocations or downsizing. While discretionary buyers may be taking a more cautious approach, needs-based demand continues to support activity across many parts of the country.
First-time buyers remain active, although annual price growth within this segment has been more subdued. Halifax reported growth of just 0.3% among first-time buyer properties, reflecting the ongoing challenges faced by those attempting to enter the housing market for the first time.
Looking ahead, Halifax expects house prices to remain broadly stable throughout the remainder of the year. While demand may continue to fluctuate in response to economic developments, the lender believes market activity will remain relatively elevated compared with historical norms.
Regional performance across the UK remains mixed, with some areas continuing to outperform others. Northern Ireland once again recorded the strongest annual growth, with average property prices rising by 7.8% over the past year to reach £227,177.
Halifax attributes much of this growth to a combination of limited housing supply and comparatively affordable property values. As buyers search for value in different regions, Northern Ireland continues to attract strong interest.
Scotland also performed well, recording annual house price growth of 3.8%. The average property price there now stands at £222,650, reflecting continued demand and relative affordability compared with parts of southern England.
Wales experienced a much more modest increase. Annual growth slowed to just 0.1%, leaving the average Welsh property valued at £230,355. While prices have remained stable, the pace of growth has clearly eased compared with previous years.
Within England, stronger performance continued to be concentrated in northern regions. The North East recorded annual growth of 3.1%, taking average property prices to £181,703. Meanwhile, the North West saw prices increase by 3%, with average values reaching £248,304.
By contrast, southern regions faced more challenging conditions. The South East experienced an annual decline of 2.1%, with average property prices falling to £382,704. London also recorded a year-on-year decrease, with property values down 1.5% to an average of £534,375.
The latest figures have prompted a range of reactions from across the property industry. Nathan Emerson, Chief Executive of Propertymark, said the decline reflects the ongoing influence of affordability pressures, particularly as many households continue adjusting to higher mortgage repayments and broader cost-of-living challenges.
Others have highlighted the complex economic backdrop currently facing buyers. Inflation concerns, geopolitical uncertainty and elevated borrowing costs are all contributing to a more cautious market environment. Nevertheless, many committed buyers are still moving forward with transactions despite these obstacles.
Industry professionals also note that mortgage approvals remain close to long-term averages, while agreed sales continue to run ahead of levels seen last year. This suggests that underlying demand remains present even if overall confidence has softened.
Some commentators have described the current housing market as slower-paced rather than weak. Buyers are taking more time to make decisions and are conducting more extensive research before committing to a purchase. However, this does not necessarily mean they are abandoning plans to move.
The increase in mortgage approvals over recent months provides further evidence that demand remains intact. While house price growth has slowed considerably compared with previous years, buyers are still actively participating in the market where affordability allows.
At the same time, uncertainty surrounding the wider economy continues to weigh on confidence. Concerns over global events, inflation and potential future tax changes have made some buyers more hesitant. Many are choosing to proceed carefully to ensure they are securing the right property at the right price.
Property experts suggest that the traditional spring housing market boost has been weaker than expected this year. Political uncertainty and questions surrounding future economic policy may also be limiting enthusiasm among some buyers.
As a result, forecasts for the remainder of the year remain relatively cautious. Some analysts expect only modest growth in house prices, with predictions suggesting increases of around 1.5% across the UK by the end of the year.
For now, the latest Halifax figures paint a picture of a market that is cooling rather than collapsing. House prices may have fallen slightly for a second consecutive month, but activity levels remain relatively healthy, and the underlying fundamentals of the housing market continue to provide support.
Whether the market regains stronger momentum in the months ahead will depend largely on inflation, mortgage affordability and broader economic confidence. Until then, buyers and sellers are likely to remain cautious, creating a more balanced and measured housing market than the rapid growth seen in previous years.
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