House prices in the three months to May were 1.9% higher than at the same point last year, but growth is slower than the 2.2% annual growth in April, the latest Halifax survey has shown.

House price growth has slowed year-on-year according to Halifax

On a monthly basis, prices rose by 1.5% in May, partially reversing the 3.1% monthly decline in April. The average house price in the UK is now £224,439.

Russell Galley, managing director, Halifax, said: “House prices grew by 1.5% on a monthly basis, in contrast to a decline seen in April. The month on month figures are more volatile than the quarterly or annual measures. In the three months to May house prices were 0.2% higher than the previous quarter and on an annual basis they are 1.9% higher. Both of these measures have fallen since reaching a recent peak, in the final months of last year.

“These latest price changes reflect a relatively subdued UK housing market. After a sharp rise in January, mortgage approvals have softened in the past three months, whilst both newly agreed sales and new buyer enquiries are showing signs of stabilisation having fallen in recent months.

“The continuing strength of the labour market is supporting house prices. In the three months to March the number of full-time employees increased by 202,000, the biggest rise in three years. We are also seeing pay growth edging up and consumer price inflation falling, and as a result the squeeze on real earnings has started to ease. With interest rates still very low we see mortgage affordability at very manageable levels providing a further underpinning to prices.”

Jeff Knight, director of marketing at Foundation Home Loans, said the figures showed the effects of uncertainty around Brexit.

“Demand may have weakened slightly, particularly as those keen to get onto the property ladder instead choose to bide their time and wait for Brexit uncertainty to settle,” said Knight. “However, supply remains an issue and this is keeping prices inflated and out of reach – particularly in the capital.”

“This makes it all the more important that renters are given options in terms of quality, price and location and don’t have to make all of the same compromises they may have to when looking to buy. A concerted effort by Government and the wider industry is needed so that we’re not continuing to just talk about housebuilding and that the supply and demand gap is reduced, and fast.”