House prices fell by 1% in the year to May, according to Halifax.

This marks the first annual decline in house prices since December 2012, said the UK’s largest lender.

Between April and May prices were largely static, edging down slightly to an average of £286,532.

Kim Kinnaird, director of Halifax Mortgages, said: “Property prices have now fallen by about £3,000 over the last 12 months and are down around £7,500 from the peak in August. But prices are still £5,000 up since the end of last year, and £25,000 above the level of two years ago.

“As expected the brief upturn we saw in the housing market in the first quarter of this year has faded, with the impact of higher interest rates gradually feeding through to household budgets, and in particular those with fixed rate mortgage deals coming to an end.”

Nations and regions

Halifax said that prices continue to fall on an annual basis across southern England, led by the South East (-1.6%, average price £385,943) and the South West (-1.4%, average price £301,079).

The West Midlands remains the best performing region with prices up 2.7% in the last year to £251,137, followed by Yorkshire & Humberside (+2.3%, average price £205,035).

Sarah Coles, head of personal finance, Hargreaves Lansdown, said: “All signs are pointing south for the property market. Prices are down in a year, and although they remained flat in May, this is the first month that the Halifax has measured annual falls. Unfortunately for sellers, this reflects the weakness that had crept into the market before the impact of higher rates had been passed onto Halifax customers – which is happening today. It means the pain is unlikely to be over yet.

“No forecast is ever guaranteed, but for those who are buying and selling at the moment, the risk that prices could remain weaker for years should factor into your plans.”