UK house prices book first annual contraction in a decade

UK house prices registered the first annual contraction in more than a decade in May as prospective buyers were hit by higher mortgage rates, according to the mortgage provider Halifax.

Property prices were 1 per cent down last month compared with May 2022, the first annual fall since December 2012.

Kim Kinnaird, director at Halifax Mortgages, said that the fall in prices reflected “the impact of higher interest rates”. She added that markets expected further rate increases, which “will inevitably impact confidence in the housing market”.

Halifax reported that average property prices had now fallen by about £3,000 over the past 12 months and were down about £7,500 from their peak in August. However, prices were still £5,000 up since the end of last year, and £25,000 above the level of two years ago, reflecting the pandemic boom.

Earlier this month, the mortgage provider Nationwide reported UK house prices falling by an annual rate of 3.4 per cent in May, the largest drop since 2009.