UK house prices fell slightly in May, according to the latest Halifax House Price Index, signalling a cooling in activity following a spring surge but suggesting that overall market sentiment remains largely steady.

The monthly decline of -0.4% brings the average UK house price to £296,648, down from £297,798 in April. The annual rate of growth also slowed, easing from +3.2% to +2.5%. This still represents an increase of more than £7,000 in the typical property’s value over the past year, underlining the market’s durability despite affordability constraints.

Amanda Bryden, head of mortgages at Halifax, said the small monthly movements reflect a market that has so far proved stable through the early part of the year. “Average prices are down by just -0.2% since January,” she noted. “The market appears to have absorbed the temporary surge in activity over spring, which was driven by the changes to stamp duty.”

Bryden pointed to an ongoing imbalance between house prices and income levels as a key challenge but added that lower mortgage rates and steady wage growth have helped support buyer confidence. She warned that the path ahead would depend heavily on the trajectory of interest rate cuts, income growth, and inflation.

While the softening in May follows a modest rise of +0.3% in April, analysts suggest the figures do not indicate a dramatic shift in market direction but rather a pause following the end of temporary stamp duty thresholds.

Holly Tomlinson, financial planner at Quilter, said: “Buyers rushed to complete transactions in March to avoid higher tax bills, but activity cooled noticeably in April. Despite this drop in demand, house prices have not fallen off a cliff.”

Tomlinson added that although borrowing costs remain high compared to recent years, sellers have yet to adjust their expectations significantly. “The fact that prices fell only modestly in May indicates that supply remains constrained,” she said.

According to Jeremy Leaf, a north London estate agent and former RICS residential chairman, the surge in activity earlier in the year continues to weigh on the market. “Most of the stock made available at that time, if not sold or under offer, is still available,” he said. “The inevitable result is a softening in prices. However, sales are still proceeding where buyers and sellers are most realistic.”

The regional picture remains varied. Northern Ireland continues to lead the UK in annual price growth, although the report does not specify the exact figure. Elsewhere, the market appears to be adjusting to a more measured pace, with many prospective buyers adopting a wait-and-see approach.

Tomer Aboody, director at specialist lender MT Finance, said: “A relatively small shift in pricing last month further shows a stable market but one which needs some fuel to get it moving. Higher taxes and costs mean buyers are waiting for further rate cuts before making their move.”