UK house prices fell unexpectedly in May, with the average price of a typical home dropping 0.1% to £298,806, according to lender Halifax. This marks the third consecutive monthly decline, following falls of 0.1% in April and 0.5% in March. Analysts had predicted a 0.1% rise.
Halifax attributed the decline to rising mortgage rates fueled by the war in Iran, which have stretched affordability and tempered buyer demand. Amanda Bryden, head of mortgages at Halifax, said property price trends continue to reflect uncertainty linked to developments in the Middle East.
On an annual basis, house prices grew by 0.5%, up slightly from 0.4% in April but well below the 1% growth expected by analysts. Bryden noted that prices are expected to remain broadly stable in the coming months despite stubbornly high mortgage rates.
The average two-year fixed mortgage rate stood at 5.66% on Thursday, up from 4.83% at the start of March, while the five-year fixed rate was 5.62%, up from 4.95%, according to Moneyfacts.
Jason Tebb of OnTheMarket described the market as the strongest buyers' market in years, with plenty of stock to choose from. However, Halifax noted that first-time buyer activity has been more subdued.
