UK house prices fell unexpectedly for the third consecutive month in May, as rising mortgage rates linked to the conflict in Iran continued to weigh on affordability and buyer demand, according to the lender Halifax.
The average price of a typical home dropped by 0.1% to £298,806, defying analyst expectations of a 0.1% rise. This follows declines of 0.1% in April and 0.5% in March. "Property price trends continue to reflect the uncertainty linked to developments in the Middle East," said Amanda Bryden, head of mortgages at Halifax.
On an annual basis, prices rose 0.5%, slightly up from 0.4% in April but well below the 1% growth forecast. High mortgage rates have persisted, with the average two-year fix at 5.66% compared to 4.83% in March, according to Moneyfacts. Halifax has halved its forecast for annual house price growth this year.
Jason Tebb of OnTheMarket described the current environment as "the strongest buyers' market we have seen in many years," with ample stock. However, first-time buyer activity remains "more subdued," said Bryden.
UK inflation slowed to 2.8% in April, but an increase in the household energy price cap from July is expected to push it higher. Amy Reynolds of Antony Roberts noted a "mismatch" in the market, with cautious sellers and cost-conscious buyers holding negotiating power.
