House prices in the UK dropped slightly last month as high borrowing costs caused growth in the property market to stall.
The average price for a UK property fell by 0.1% between April and May, according to the Halifax house price index. This meant that he average home was worth £288,688, which was still 1.5% higher than the same month last year.
This follows the Bank of England‘s (BoE) decision to leave UK interest rates on hold at their 16-year high of 5.25% for a sixth consecutive time.
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Amanda Bryden, head of mortgages at Halifax, said: “Market activity remained resilient throughout the spring months, supported by strong nominal wage growth and some evidence of an improvement in confidence about the economic outlook.
“This has been reflected in a broadly stable picture in terms of property price movements, with the average cost of a property little changed over the last three months.
“A period of relative stability in both house prices and interest rates should give a degree of confidence to both buyers and sellers.”
Separate data from Uswitch showed that the average rate on a two-year fixed deal this week stood at 5.89%, while rates for a five-year deal came in at 5.36%.
The North West is the strongest performing region in the UK, where house prices grew 3.8% on an annual basis in May. The average price of a property in the North West is now £232,258.
Northern Ireland continues to show strong annual growth, up 3.2% in May, pulling back slightly from 3.3% in April.
House prices in Scotland also increased, with a typical property now costing £204,952, up 1.9%. In Wales, house prices grew at a more modest 0.7% to £219,483.
Eastern England recorded the largest decline in annual growth across the UK. House prices there now average £329,853, down 0.8% compared to May last year.
London continues to have the most expensive average price tag, now at £536,821, up marginally by 0.2% compared to last year.
Propertymark CEO Nathan Emerson said: “The housing market seems to be generally moving in the right direction, with house prices going up annually from this time last year.
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“With a general election now on the horizon, there may be potential caution from buyers and sellers, especially those hoping to step onto the housing ladder for the first time, as they await any announcements regarding government support. People will also be carefully awaiting the Bank of England’s next announcement this month.”
It comes as a rival index from Nationwide showed house prices climbed in May for the first time in three months, rising by 0.4% after a decline of 0.4% the previous month.
Stephen Perkins, managing director at Yellow Brick Mortgages, said: “Static is a fair summary of the market right now. House prices are remaining firm, despite all the financial pressures coming from the high base rate.
“The cost of living crisis has eased off and wage growth as proved resilient. If feels like the market is holding its breath, awaiting either a base rate reduction or a new government.”
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