The UK housing market in May presented a picture of cautious stability, with average house prices dipping slightly by 0.4 percent, equivalent to around £1,150, after a modest rise in April. Despite this monthly decline, year-over-year growth stands at 2.5 percent, pushing the average property value to £296,648.

Since the start of the year, the overall picture reveals a negligible decline of 0.2 percent, suggesting that the market has levelled off following a spring surge influenced by stamp duty adjustments. Although housing affordability remains strained due to the continued gap between property prices and incomes, easing mortgage rates and consistent wage growth have helped to bolster buyer sentiment.

Despite persistent financial pressures and macroeconomic uncertainty, the market's resilience underscores its adaptability. Looking ahead, the trajectory of interest rate cuts, income growth, and inflation will be key to determining whether this fragile stability can translate into sustained recovery or renewed volatility.

The Halifax House Price Index (HPI) is the UK's longest running monthly house price measure with data covering the whole country going back to January 1983. The index is based on the largest monthly sample of mortgage data, typically covering around 15,000 house purchases per month, and covers the whole calendar month. In March 2016 Markit announced that it would be acquiring the Halifax HPI from Lloyds Banking Group. Halifax continues to publish the index on behalf of Markit and both the name and the basic methodology remain unchanged. However, in May 2020, the annual growth measure was changed from the average of the last three months to just the latest month.

Home values affect much in the economy - especially the housing and consumer sectors. Periods of rising home values encourage new construction while periods of soft home prices can damp housing starts. Changes in home values play key roles in consumer spending and in consumer financial health. During the first half of this decade sharply rising home prices boosted how much home equity households held. In turn, this increased consumers' ability to spend, based on wealth effects and from being able to draw upon expanding home equity lines of credit.