THE Halifax says house prices have edged down 0.1% in May with experts warning “stagnation has hit the UK property market”.
House prices fell 0.1% in May, following a similar 0.1% fall in April, according to the Halifax House Price Index.
The average property price is now £298,806, compared with £299,251 in April. Annual growth is up slightly to 0.5%, from 0.4% in April.
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 growth in the last six months.
Scotland also recorded strong annual growth, now at 3.8% with an average price of £222,650.
Wales has seen property price growth continue to slow, now 0.1% on an annual basis, taking the typical home value to £230,355.
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.
Stagnation has clearly hit the UK property market
Amanda Bryden, Head of Mortgages at the 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.
“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.”
Harry Goodliffe, Director at Winchester-based HTG Mortgages, said high rates are making potential buyers pause.
He added: “The reality is that mortgage rates are still higher than many buyers would like, and ongoing uncertainty both in government and across the wider world is having an impact on confidence. Inflation is also causing some people to think twice before committing to a purchase.
“That said, people are still buying and selling homes every day, which shows the market is proving more resilient than many expected. My feeling is that house prices will remain fairly flat over the next few months. If mortgage rates continue to ease, confidence should start to pick up again towards the end of the year.”
House prices will remain fairly flat over the next few months
Nicky Stevenson, Managing Director at Fine & Country, advised sellers to be realistic with pricing.
She added: “A slight fall in house prices last month is a reminder that monthly readings can be uneven, particularly in a market that remains sensitive to mortgage pricing and the wider cost of living.
“It isn’t entirely unexpected though, with Nationwide also reporting a fall earlier this week. Potential buyers may be tightening their purse strings and delaying a purchase, forcing sellers to be more flexible on their asking price.
“With confidence still being tested by global uncertainty and energy costs feeding into inflation expectations, it’s understandable that some buyers have taken a more cautious approach.
“Even so, the wider picture remains one of relative stability. Annual growth climbed to +0.5%, so a monthly dip does not point to a market falling away. Many existing homeowners are protected by fixed-rate mortgages, which continues to help prevent sharper adjustments.
“Earlier this week, Halifax announced rate cuts to help get more first-time buyers on the market, and it isn’t the only lender to trim rates on selected deals in recent weeks.
“The bottom line is that sellers need to be realistic when it comes to pricing. Where the valuation reflects local demand and affordability, transactions are still progressing healthily, it’s just taking a little more patience and flexibility.”
Babek Ismayil, CEO at homebuying platform OneDome, said the balance of power is currently with buyers.
He added: “The UK’s property market is not immune to wider geopolitical events, as the Halifax points out. But while house prices are under pressure, they are not imploding. When the war in the Middle East began, mortgage rates shot up significantly and this was always going to impact demand.
“But demand is still there and the current uncertainty in markets has opened a window for aspiring buyers to secure property at prices that were unthinkable at the beginning of the year. That awareness and sense of opportunity is keeping the market ticking along.
“When the conflict in the Middle East eventually resolves, the balance of power will once again start to shift back to sellers, but for now it is categorically a buyers’ market and many people are taking advantage of that fact.”
A muted May was always likely
Andrew Montlake, CEO at London-based Coreco, said the Middle East war was always going to lead to pressure on property prices.
He added: “A muted May was always likely given the higher mortgage rates, and weaker sentiment, caused by the war in the Middle East, but lenders are doing their level best to help more people onto the property ladder.
“Innovation at higher loan-to-values is keeping things moving despite the fraught geopolitical environment and many first-time buyers are taking advantage of a strong negotiating environment.”
Rohit Kohli, Director at Romsey-based The Mortgage Stop, said buyers are negotiating better prices and that is reflected in the figures.
He added: “House prices are not falling off a cliff, but sellers are losing some of the control they had. Two monthly falls in a row point to a cooler, more cautious market. The key point is that this is not happening evenly. Halifax shows prices down annually in the South East and in London, while Northern Ireland and the North West is up.
“Activity has not disappeared either. Mortgage approvals reached their highest level since January 2025, but buyer enquiries are still weak. That tells the real story: people are still moving, but they are negotiating harder and refusing to overpay. Unless mortgage rates fall meaningfully, I expect prices to stay flat, with sellers needing to be realistic.”
House prices are not falling off a cliff
Chris Barry, Director at London-based Thomas Legal, pointed out that a reduction in house prices is worse than it looks given the current climate.
He added: “A real reduction in property values is worse than it seems given inflation is higher than targeted and pay rises have outstripped house price growth for the past few years.
“What appears to be small incremental decreases over the past two months, actually points to very weak demand driven by consumer confidence and that’s concerning.”
Riz Malik, Independent Financial Adviser at Southend-on-Sea-based R3 Wealth, said stamp duty reform would kickstart the property market again.
He added: “Stagnation has clearly hit the UK property market as the data matches sentiment across the country. Who is to blame? There are many reasons both foreign and domestic.
“What is clear is that the solution needs to come from the government as lenders have tried their best. Only one thing will move this market and that’s stamp duty reform.”
Photo by Kai Pilger on Unsplash.
