Coverage Comparison

Two major UK lenders have reported contrasting but significant moves in the housing market for May, both pointing to a slowdown driven by rising mortgage rates and economic uncertainty. Nationwide recorded a 0.6% monthly fall in average house prices, the first decline this year, while Halifax noted a third consecutive monthly drop of 0.1%. The discrepancies in figures stem from different methodologies and sample periods, but both agree that affordability pressures are mounting.

Key Claims

  • Monthly price movements: Nationwide reported a 0.6% drop in May, while Halifax recorded a 0.1% fall. The latter was the third monthly decline in a row, following 0.1% in April and 0.5% in March.
  • Annual growth: Nationwide said prices were 1.7% higher year-on-year, down from 3% in April. Halifax put annual growth at 0.5%, slightly up from 0.4% in April but below the 1% analysts had expected.
  • Average prices: Nationwide set the average UK house price at £278,024, while Halifax reported £298,806.
  • Mortgage rates: Two-year fixed rates stood at 5.66–5.68% at the end of May, according to Moneyfacts, up from 4.83% in early March. Five-year fixes ranged from 5.62% to 5.63%, up from 4.95%.
  • Inflation: UK inflation eased to 2.8% in April, the lowest in over a year, but higher inflation expectations have kept borrowing costs elevated.

Perspectives

Nationwide’s chief economist Robert Gardner described the loss of momentum as “to be expected” given the uncertainty from the Middle East conflict and its effect on energy prices and interest rates. He noted that the impact on affordability has “so far been modest,” with swap rates well below 2023 highs.

Halifax’s Amanda Bryden echoed that property trends reflect uncertainty, but stressed that despite recent cuts to some mortgage rates, higher inflation expectations have kept borrowing costs above start-of-year levels, stretching affordability and tempering demand.

Tom Bill of Knight Frank warned there would be “no cliff-edge moment” but that higher borrowing costs would erode spending power and squeeze prices as older, cheaper fixed-rate deals expire. Savills revised its forecast to predict a 2% fall in prices this year, citing the Middle East conflict’s impact.

Jason Tebb of OnTheMarket struck a more optimistic chord, calling it “the strongest buyers’ market we have seen in many years,” with plenty of stock and pragmatic buyers and sellers adjusting expectations rather than losing confidence.