Property prices fell in May, by a steeper margin than many in the industry had predicted. 

A drop was expected after the April rush to beat the Stamp Duty deadline, but it wasn’t as much as a monthly 0.4%. That bigger decline brought the average property price in the UK to £296,648, which was a fall of around £1,150.

Annual growth falls to 2.5%

At the same time the year-on-year figure fell to 2.5% growth, according to the latest Halifax House Price Index figures. Growth the previous month was 3.2%. The latest figures show property has increased by around £7,000 over the past year.

Analysts point to economic uncertainty and ongoing financial pressures on households for the slowdown (including the increase in private school fees). The drop in activity was also seen in mortgage approval figures, which the Bank of England said, fell by 3,100, bringing the total number of residential mortgage approvals to 61,500.

Property market ‘remains resilient’ says Halifax

Halifax’s head of mortgages, Amanda Bryden said: “These small monthly movements point to a housing market that has remained largely stable, with average prices down by just -0.2% since the start of the year.” 

She added: “Despite ongoing pressure on household finances and a still-uncertain economic backdrop, the housing market has shown resilience – a story we expect to continue in the months ahead.”

Breaking down the figures in to regional differences, Northern Ireland, Scotland and Wales all saw a rise in house prices – Northern Ireland by 8.6%, and Scotland and Wales by 4.8%. The average property in Northern Ireland now sits at £209,388. In Scotland it’s £214,864 and in Wales £230,405. The average property in London costs £542,017, after prices in the Capital grew 1.2% annually.

Demand for housing in the UK remains huge, of course, with the government pledging to build 1.5 million new residential dwellings by 2009.