UK house prices fell on an annual basis last month for the first time since December 2012, hit by rising interest rates, according to mortgage lender Halifax.
In its latest health check of the housing market, Halifax said the average house price remained flat in May following a 0.4% fall in April, meaning house prices fell by 1% when compared to May 2022.
Kim Kinnaird, director, Halifax Mortgages, said: “Given the effectively flat month, the annual decline largely reflects a comparison with strong house prices this time last year, as the market continued to be buoyant heading into the summer.”
A typical UK property now costs £286,532 compared to £286,662 in April.
“As expected the brief upturn we saw in the housing market in the first quarter of this year has faded, with the impact of higher interest rates gradually feeding through to household budgets, and in particular those with fixed rate mortgage deals coming to an end,” Kinnaird added.
“With consumer price inflation remaining stubbornly high, markets are pricing in several more rate rises that would take the base rate above 5% for the first time since the start of 2008. Those expectations have led fixed mortgage rates to start rising again across the market,” she added.
“This will inevitably impact confidence in the housing market as both buyers and sellers adjust their expectations, and latest industry figures for both mortgage approvals and completed transactions show demand is cooling.”
“Therefore further downward pressure on house prices is still expected,” Kinnaird warned.