But for some areas – there IS good news
The British housing market lost further momentum in May as average home prices declined more sharply than anticipated, reflecting the lingering effects of economic unease and a softening in buyer demand following recent fiscal changes.
New data from Halifax revealed a 0.4% drop in house prices last month, amounting to an average loss of approximately £1,150 and bringing the typical home value down to £296,648. This marks the largest quarterly contraction in nearly a year and signals a broader cooling across the sector.
The pace of annual growth has also slowed notably, easing to 2.5% from 3.2% in April — the weakest year-on-year increase since July 2024. Analysts had forecast a milder deceleration, and the figures have prompted renewed scrutiny of the market’s trajectory amid ongoing affordability challenges.
“While the housing market has demonstrated resilience, recent data indicates that activity has begun to moderate,” said Amanda Bryden, head of mortgages at Halifax. “Affordability pressures, economic uncertainty and the recent shift in stamp duty rules are all contributing factors.”
The reduction in price growth follows a flurry of transactions earlier in the year, driven by buyers rushing to finalise purchases before the April stamp duty changes came into effect in England and Northern Ireland. Since then, transaction volumes have declined dramatically. HMRC estimates show that home sales plummeted by 64% in April compared to the previous month.
Mortgage approvals — often considered a leading indicator of future activity — have also fallen for three straight months. Figures from the Bank of England show approvals for house purchases declined to 60,500 in April, below market expectations and down by over 3,000 from March.
Jeremy Leaf, an estate agent based in north London, told The Guardian that the decline was a market adjustment following the artificially high demand earlier in the year. “We’re now seeing the aftermath of the stamp duty deadline,” he noted. “Stock remains available, but the sense of urgency among buyers has faded.”
Despite these short-term fluctuations, prices remain elevated in some regions. Halifax reports that property values in Northern Ireland rose by 8.6% over the past year, while Scotland and Wales both saw gains of 4.8%. By contrast, London recorded a modest increase of just 1.2%, though it continues to be the most expensive region, with average home values surpassing £542,000.
Recent figures from Rightmove suggest that buyer interest has held firm in certain pockets of the country. In towns such as Heywood in Greater Manchester and Pudsey in West Yorkshire, sales volumes in May were close to double those recorded a year earlier — a sign that affordability continues to drive demand outside the capital. “Many of this year’s most active markets feature homes priced below the national average,” said Colleen Babcock of Rightmove. “With cost-of-living pressures and higher mortgage rates, buyers are prioritising value more than ever.”
As the market recalibrates, attention now turns to the Bank of England and the path of interest rates. Although a recent cut to 4.25% has provided some relief, mortgage rates remain elevated compared to pre-pandemic levels. Lenders such as NatWest and Nationwide have eased borrowing criteria, potentially increasing access to funds for first-time buyers.
Yet, experts caution that broader economic forces — particularly inflation and wage growth — will dictate whether the housing sector can regain stable footing in the coming months. “Uncertainty still hangs over the outlook,” said Tom Bill, head of UK residential research at Knight Frank. “While the fundamentals supporting demand are intact, we expect the market to track sideways until there’s a clearer signal on rate direction.”
