Annual house price growth in the UK fell to 1.7% in May, from 3.0% in April, marking the first monthly decline so far this year, the latest national house price index revealed.
The index shows that house prices fell by 0.6% in the month.
The average property price in May was £278,024.
Countrywide’s chief economist Robert Gardner says: “Given the uncertainty caused by developments in the Middle East and rising energy prices and market interest rates, some slowdown was expected.”
“Indeed, consumer confidence has weakened significantly since the start of the conflict, with the GfK headline index falling to its lowest level since late-2023 in April, with a slight increase in May.”
“Housing market measures have also deteriorated. The Royal Institution of Chartered Surveyors reported a sharp drop in consumer inquiries in March, making the index the weakest reading since 2023 and remained deep in negative territory in April.”
Also commenting, Quilter financial editor Ian Futcher says: “The Bank of England is holding rates for now, but the outlook remains uncertain. Much will depend on how the situation in the Middle East changes and what that means for inflation and power.”
“For now, we can expect the housing market to remain subdued. High energy costs continue to weigh on household budgets and affordability will decrease, weakening consumer sentiment.”
“Furthermore, although mortgage rates have eased slightly from the highs seen at the beginning of the year as lenders work hard to attract a limited number of buyers, they remain high and we can expect them to remain so for some time to come.”
“That is likely to moderate house price growth in the coming months. Consumers are becoming more price sensitive as higher borrowing costs and financial pressures build, meaning any price increases will be small.”
“Loan rates will continue to control the pace of the market in the coming months. Exchange rates are heavily influenced by global developments, and without a clear resolution to the current tensions there is a risk that they may rise again.”
Meanwhile, MT Finance deputy chief executive Gareth Lewis adds: “Prices are under pressure and volumes are lower than expected.”
“National statistics show a softening of the housing market. From a lending perspective, we’re seeing appraisers watch value while buyers are looking for a steal and willing to negotiate on price.”
Fine & Country managing director Nicky Stevenson comments: “A dip in May will feel like a tonal shift after the spring high, but it’s not entirely unexpected given the background.”
“Momentum was likely to soften despite high uncertainty, higher fuel prices, and increased building of electricity market inputs and market interest rates.”
“Importantly, this looks more like a pause than a reversal. Annual growth slowed to 1.7%, but the market has proved resilient over the past few years, and many homes are still in a strong position.”
