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UK house prices declined more sharply than expected last month, marking the biggest quarterly drop in nearly a year as economic uncertainty continued to weigh on the property market.
According to Halifax, the average house price fell by 0.4% in May to £296,648 — a much steeper drop than the 0.1% forecasted by City economists.
Data released by Halifax on Friday revealed that property prices have declined in three of the last four months. The fall in May followed a modest 0.3% increase in April.
This larger-than-anticipated decline also led to a 0.3% fall in house prices over the past quarter, the sharpest three-month drop since June 2023.
Annual growth also slowed significantly, with house prices rising by just 2.5% compared to the same time last year — down from 3.2% in April and below projections of nearly 3%. This marks the weakest annual growth since July 2023.
Amanda Bryden, head of mortgages at Halifax, said the latest figures indicate that the market is now settling after a surge in transactions driven by buyers rushing to beat stamp duty changes in England and Northern Ireland in April.
“Despite continued pressure on household budgets and a still-uncertain economic climate, the housing market has proven relatively resilient,” she noted. “Future trends will hinge on the pace of interest rate cuts, income growth, and overall inflation.”
However, the number of mortgage approvals — a key indicator of future housing demand — declined for the third straight month in April. According to the Bank of England, net residential mortgage approvals dropped by 3,100 to 60,500, falling short of analysts’ expectations.
HM Revenue and Customs data also showed that house sales in April totaled 64,680 — a dramatic 64% decrease from the 177,440 recorded in March.
Jeremy Leaf, a London estate agent, said: “The surge in purchases made earlier to beat the end of the stamp duty holiday in March is continuing to dampen market activity.”
He explained that much of the property listed during that period remains on the market if it hasn’t already sold or gone under offer, leading to a natural decline in prices. “That said, transactions are still going ahead where both buyers and sellers have realistic expectations,” he added.
