UK house prices were broadly unchanged in May, with Halifax reporting a second consecutive monthly fall of 0.1%.

The lender said the average property price fell to £298,806 in May, from £299,251 in April.

Annual house price growth edged up to 0.5%, compared with 0.4% in April, although Halifax said affordability pressures and wider economic uncertainty continued to weigh on demand.

BROADLY STABLE

Amanda Bryden, head of mortgages at Halifax, said: “Average house prices remained broadly stable in May, with a slight fall of -0.1% matching that seen in April. 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 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.”

REGIONAL DIFFERENCES

Halifax said regional and national house price performance continued to vary significantly, with stronger growth in parts of the North and weaker conditions in southern England.

Northern Ireland recorded the strongest annual growth in the UK, with average prices up 7.8% over the year to £227,177. Halifax said this reflected limited supply and relative affordability compared with some other parts of the country.

Scotland recorded annual growth of 3.8%, taking the average property price to £222,650.

In Wales, annual growth slowed to 0.1%, with the average home valued at £230,355.

In England, 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.

Southern markets remained weaker. Prices in the South East fell 2.1% year-on-year to £382,704, while London values were down 1.5% at £534,375.

Tomer Aboody, director of specialist lender MT Finance, said: “With rates and inflation still unsettled and on the higher side, buyers are trying to stay active. More activity in the market is being encouraged as more sellers are coming to the market, and buyers finally having some stock to look at.

“With the macro climate still uncertain and rates potentially going to be higher by the end of the year, buyers are not wanting to hang around and wait.”

OUTLOOK REMAINS UNCERTAIN

Karen Noye, mortgage specialist at Quilter, said: “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.

“For those looking to buy or remortgage, the environment remains finely balanced. Rates are no longer moving sharply higher, but nor is there a clear downward trajectory.

“In this kind of market, staying close to developments and reviewing options early, ideally with professional advice, will leave borrowers better placed in the long run.”

ENCOURAGING FOR FIRST-TIME BUYERS

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “As Swap rates, which underpin the pricing of fixed-rate mortgages, continue to fall, so lenders continue to trim their mortgage rates, which is helping ease affordability.

“However, the steadiness in house prices suggests buyers are still prepared to negotiate hard and are not willing to pay over the odds.

“First-time buyers will be encouraged as house prices remain steady rather than soar. Lenders are working hard on offering solutions to those trying to get on the ladder for the first time, which is leading to a small improvement in their numbers.”