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Average UK house prices dipped 0.4% in May, representing a fall of nearly £1,150, after changes to stamp duty came into effect, according to the latest data from Halifax.

The average UK property is now valued at £296,648, down from £297,781 in April, when house prices rose for the first time this year.

On an annual basis, prices rose to 2.5% – adding just over £7,000 to the value of a typical home – though this was down from 3.2% in April.

Amanda Bryden, head of mortgages at Halifax, said: “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. The market appears to have absorbed the temporary surge in activity over spring, which was driven by the changes to stamp duty."

On an annual basis, prices rose to 2.5% – adding just over £7,000 to the value of a typical home – though this was down from 3.2% in April.

Amanda Bryden, head of mortgages at Halifax, said: “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. The market appears to have absorbed the temporary surge in activity over spring, which was driven by the changes to stamp duty."

"Affordability remains a challenge, with house prices still high relative to incomes," she added. "However, lower mortgage rates and steady wage growth have helped support buyer confidence."

"The outlook will depend on the pace of cuts to interest rates, as well as the strength of future income growth and broader inflation trends," Bryden said. "Despite ongoing pressure on household finances and a still uncertain economic backdrop, the housing market has shown resilience – a story we expect to continue in the months ahead."

Halifax data showed that house price growth across Northern Ireland, Wales and Scotland continued to outpace English regions.

Northern Ireland once again recorded the fastest pace of annual property price inflation, up by 8.6% over the past year, with the typical home now costing £209,388, though this was still well below the UK average.

Read more: Mortgage lenders raise rates amid uncertainty over BoE interest rate cuts

In England, North West and Yorkshire and the Humber saw the fastest annual house price growth of 3.7%, with the average property in these areas now costing £240,823 and £213,983 respectively.

London continued to see more subdued growth, with prices up just 1.2% year-on-year, though the capital remained by far the most expensive part of the UK housing market, with the average home costing £542,017.

Professor Joe Nellis, economic adviser at MHA, the accountancy and advisory firm and one of the creators of the Halifax House Price Index, said that price "growth is set to continue as huge demand for houses persists in the UK. This is something that the government has recognised, setting an ambitious target to build 1.5 million new homes by 2029, but recent estimates suggest that this is looking overly optimistic."

"One thing to consider over the next year is the Renters’ Rights Bill introduced to parliament by Angela Rayner in her role as secretary of state for housing," he said. "Expected to pass in the autumn, this bill will provide greater protection for tenants and impose new restrictions on landlords, including ending ‘no fault’ evictions."

"These new restrictions could disincentivise landlordism, encouraging the sale of rental properties and increasing supply, or discouraging potential landlords from buying properties and reducing demand," he added. "Both scenarios would apply downward pressure on prices and provide some respite for would-be homeowners."

Holly Tomlinson, financial planner at Quilter, said: "The fact that prices fell only modestly in May indicates that supply remains constrained and sellers have not yet been forced to adjust their expectations. However, with affordability still stretched and borrowing costs relatively high, the risk of a more prolonged slowdown cannot be ignored."