Property prices saw a slight reduction in May, according to Halifax, following a slight rise in April. Find out what this means for the housing market.
House prices dropped slightly in May by 0.4%, compared to a 0.3% increase in April, according to Halifax. The lender’s latest House Price Index, released on 6 June, showed that the average property price in the UK is now £296,648 compared to £297,798 last month. Annual house price growth slowed to 2.5% in May from 3.2% in April.
‘Over the past 12 months, prices have grown by +2.5%, adding just over £7000 to the value of a typical home,’ says Amanda Bryden, Head of Mortgages at Halifax. ‘These small monthly movements point to a housing market that has remained largely stable, with average prices down by just -0.2% since the start of the year. The market appears to have absorbed the temporary surge in activity over spring, which was driven by the changes to stamp duty.
One economic adviser said that the price drop was a surprise, but noted that the housing market remains “strong” overall.
Challenge for first-time buyers
Halifax has acknowledged that being able to afford to buy a proper home can still be a challenge for some. Estate agent Savills recently declared that more than half of first-time buyers are still relying on the “Bank of Mum and Dad” to get on the property ladder,
‘Affordability remains a challenge with house prices still high relative to incomes,’ adds Bryden. ‘However, lower mortgage rates and steady wage growth have helped support buyer confidence.’
So, what does the future have in store for the property market in the coming months? ‘The outlook will depend on the pace of cuts to interest rates, as well as the strength of future income and broader inflation trends,’ says Bryden. ‘Despite ongoing pressure on household finances and a still uncertain economic backdrop, the housing market has shown resilience – a story we expect to continue in the months ahead.’
Base rate changes
The Bank of England reduced the base rate from 4.5% to 4.25% in its most recent review on 8 May. The next review is due on 19 June. It’s hoped that there will be further reductions, but there is no guarantee of when any future reductions will occur.
In terms of regional differences in property prices, the North West and Yorkshire and the Humber are showing the most promising annual price growth, with both regions experiencing growth of 3.7%. The average property prices in these areas are now £240,823 and £213,983, respectively.
Wales and Scotland also saw encouraging growth of 4.8%, with average prices now at £240,823 and £213,983 respectively. However, Northern Ireland experienced the fastest annual property growth, with prices increasing by 8.6% over the past year. A typical home in Northern Ireland now costs £209,388.
London is seeing more subdued growth with prices rising by just 1.2% year-on-year. However, the capital remains the most expensive area of the UK, with the average London home costing £542,017.