UK house prices fall for third successive month amid Iran war uncertainty

Halifax says on an annual basis house prices grew by 0.5% in May. Photograph: Maureen McLean/Shutterstock View image in fullscreen Halifax says on an annual basis house prices grew by 0.5% in May. Photograph: Maureen McLean/Shutterstock UK house prices fall for third successive month amid Iran war uncertainty Unexpected monthly drop of 0.1% in May leaves price of typical home at £298,806, says lender Halifax Business live – latest updates UK house prices fell unexpectedly in May as rising mortgage rates fuelled by the war in Iran affected affordability and homebuyer demand. The average price of a typical UK home fell by 0.1% in May to £298,806 compared with April, the third consecutive monthly drop recorded by the lender Halifax. Analysts had been expecting a return to growth, with a consensus of a 0.1% rise forecast for May. The monthly drop followed falls of 0.1% in April and 0.5% in March. “Property price trends continue to reflect the uncertainty linked to developments in the Middle East,” said Amanda Bryden, the head of mortgages at Halifax. “Despite recent cuts to mortgage rates, higher inflation expectations have kept borrowing costs above the level seen at the start of the year, continuing to stretch affordability for many buyers and temper demand.” However, Halifax said that on an annual basis house prices grew by 0.5%, up slightly from 0.4% in April, although this was still well below analysts’ expectations for 1% growth. Bryden said that house prices were expected to “remain broadly stable” in the coming months despite interest rates on mortgages remaining stubbornly high. Halifax has already slashed its expectation of annual house price growth this year in half. On Thursday the average two-year fixed mortgage rate stood at 5.66%, up from 4.83% at the start of March, according to Moneyfacts. The average five-year fixed-rate mortgage was 5.62%, up from 4.95%. Jason Tebb, the president of OnTheMarket, said the market has moved in buyers’ favour despite the pressure facing those looking to get on the property ladder or move home. “This is the strongest buyers’ market we have seen in many years, with plenty of stock to choose from,” he said. “Little movement in average house prices suggests buyers and sellers are adopting a pragmatic outlook and adjusting expectations rather than a loss of confidence. “Steadier prices are better as far as those trying to get on the ladder for the first time are concerned, as there is less risk of being priced out further.” However, Halifax’s Bryden said that the latest figures showed that the growth in activity among first-time buyers was “more subdued”. UK inflation slowed to 2.8% in April , the lowest rate in more than a year, as a reduction in the household energy price cap helped mitigate a sharp rise in fuel prices since the start of the conflict in the Middle East. However, economists believe inflation is likely to increase in the coming months because of factors including a 13% increase in the house