According to the latest HPI from Halifax, the average UK house price plateaued in May 2023 following a 0.4% drop in April, with a typical price now £286,532, compared to £286,662 the previous month.
This is as the annual rate of house price growth fell to -1.0%, the first decline since December 2022.
Detached properties continue to post modest price growth, while house prices in the South of England remain under the greatest pressure, says Halifax.
Kim Kinnaird, director at Halifax Mortgages, said: “The annual rate of growth fell to -1.0%, marking the first time since 2012 that house prices have fallen year-on-year.
“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.
“Property prices have now fallen by about £3,000 over the last year and are down around £7,500 from the peak in August — but prices are still [almost] £5,000 up since the end of last year.
“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.”
Mark Harris, chief executive at SPF Private Clients, said that lenders are continuing to “increase their mortgage rates, pulling products with little or no notice in response partly to funding costs and in response to what other lenders are doing.”
“Swap rates, which underpin the pricing of fixed-rate mortgages, have settled since the inflation news sent them soaring, if this continues, we would expect mortgage pricing to also become less volatile,” he continued.
He said borrowers coming up to re-mortgage who are worried about their options should “seek advice from a broker and consider reserving a rate for peace of mind.”
“Annual house price growth may be down for the first time in 11 years, but what we are witnessing is a correction rather than a crash,” added Kim McGinley, director at Vibe Specialist Finance.
“After the mini-Budget, confidence in the property market fell sharply but during the spring, sentiment steadily improved as mortgage rates came down and the economic outlook felt less bleak,” she added.
Markets analyst at InvestingReviews.co.uk, John Choong, mirrored Marks’ comments and called the withdrawing of products by mortgage lenders “a blip” in the grand scheme of things.
"House prices going into the second half of the year should remain relatively steady as unemployment remains at healthy levels with slowing inflation also easing pressures on household income, [but] you can't rule out higher mortgage rates if inflation continues to come in hotter than expected,” he continued.
