The Halifax House Price Index in the UK rose by 2.5% year-on-year in May 2025, marking the smallest annual increase in ten months and continuing the trend of slowing growth from a 3.2% rise in April.
UK house price growth slows to 10-month low
On a monthly basis, house prices declined by 0.4%, reversing a modest 0.3% gain in the previous month. The drop follows the recent stamp duty tax hike introduced in April, which temporarily pulled forward demand and distorted spring activity. As a result, the average UK property price fell to £296,648 in May, down from £297,798 in April.
“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,” said Amanda Bryden, Head of Mortgages at Halifax. “The market appears to have absorbed the temporary surge in activity over spring, which was driven by the changes to stamp duty.”
Despite the recent dip in prices, affordability remains a key concern, as house prices remain elevated relative to household incomes—particularly for first-time buyers. However, improved mortgage conditions and steady wage growth have provided some support to buyer sentiment. Fixed-rate mortgage deals have continued to drift lower, helped by easing inflation and growing expectations that the Bank of England may begin cutting interest rates in the coming months.
Activity levels remain subdued
Activity levels in the housing market remain subdued compared to historical norms, but have shown signs of stabilization, with more buyers and sellers returning gradually amid improved financial conditions. Still, uncertainty persists around the future path of interest rates, fiscal policy, and inflation, all of which will shape the affordability landscape and price momentum in the second half of the year.
Looking ahead, the outlook for the UK housing market remains finely balanced. Much will depend on the pace and extent of monetary easing by the Bank of England, the resilience of the labor market, and how quickly real incomes can rise to narrow the affordability gap. Regional disparities also remain significant, with prices in London and the South East continuing to lag behind growth seen in some northern and Midlands regions, where affordability metrics are more favorable.
