UK House prices in May dropped by 1 per cent on an annualised basis, the first decline since December 2012. The mortgage lender Halifax said on a monthly basis <a href="https://www.thenationalnews.com/world/uk-news/2023/05/09/uk-lender-skipton-launches-deposit-free-mortgage/" target="_blank">average house prices were flat </a>in May, having fallen by 0.4 per cent in April. The typical UK property now costs £286,532 ($355,376), compared with £286,662 in April. "Given the effectively flat month, the annual decline largely reflects a comparison with strong house prices this time last year, as the market continued to be buoyant heading into the summer," said Kim Kinnaird, director at Halifax Mortgages. “Property prices have now fallen by about £3,000 over the last 12 months and are down around £7,500 from the peak in August. But prices are still £5,000 up since the end of last year, and £25,000 above the level of two years ago.“ Southern Britain again fared worst, with prices continuing to fall on an annual basis across the region. Prices in the South East were 1.6 per cent lower in May this year compared with last year, while prices in the South West of the UK were 1.4 per cent lower. In London, prices were 1.2 per cent lower in May, compared with a year earlier and the average price of a house in the capital was £536,622. On an annualised basis, the best performing UK region was the West Midlands where prices rose by 2.7 per cent in May, bringing the value of the average house to £251,137. The Halifax said that the value of existing houses continued to decline, falling 1.9 per cent in May. However, prices for new-build properties rose by 2.8 per cent on an annualised basis, although that was the weakest rate of growth for nearly three years. Overall, the Halifax said the UK housing market was weakening and house prices would decline more in the face of <a href="https://www.thenationalnews.com/world/uk-news/2023/05/24/uk-inflation-falls-to-87/" target="_blank">high inflation</a> and the prospect of more increases to interest rates. “With consumer price inflation remaining stubbornly high, markets are pricing in several more rate rises that would take Base Rate above 5 per cent for the first time since the start of 2008," Ms Kinnaird said. "Those expectations have led fixed mortgage rates to start rising again across the market. “This will inevitably impact confidence in the housing market as buyers and sellers adjust their expectations, and latest industry figures for both mortgage approvals and completed transactions show demand is cooling. "Therefore further downward pressure on house prices is still expected. “One continued source of support to house prices is the labour market. While unemployment has recently ticked up from very low levels, brisk wage growth would over time help to improve housing affordability, if sustained,” she added. Halifax's figures are slightly better than those <a href="https://www.thenationalnews.com/world/uk-news/2023/06/01/uk-property-prices-fall-again/" target="_blank">Nationwide released last week </a>that showed house prices fell by 3. 4 percent year on year in May 2023, the largest annual decline in nearly 14 years. Nonetheless, analysts noted that despite the turbulence in the bond market last month, which was brought on by an increase in the core inflation figure for April, house prices have remained relatively resilient. "While mortgage rates are on the rise again and mortgage approvals are on the decline, so far house prices have only been edging down slowly rather than falling more dramatically," said Alice Haine, personal finance analyst at Bestinvest. "It is certainly more of a buyer’s market now than two years ago at the tail end of the pandemic when sellers had the upper hand, but people still need to move, and they may be willing to pay a premium for a property if it is their dream home. " Whether they can afford to is a different matter, however."