The lender says the decline in prices is caused by the difficulties created for potential house purchasers by the rapid rise in house prices in the last few years. A squeeze on spending power and a reduction in credit availability has also curbed housing demand.
Halifax says high employment levels, low interest rates and a shortage of new homes support housing valuations. It points out that employment increased by 117,000 in the three months to March compared with the preceding quarter and stands at a record high of 29.54 million.
Chief economist Martin Ellis says: “House prices fell by 2.4 per cent in May. Price falls should be measured against the significant gains in recent years. The average UK house price rose by more than £88,000, or 79 per cent, between August 2002 and August 2007.”
Halifax says it expects unemployment to rise during the year due to an easing in growth but it points out that the scale of the increase in unemployment is unlikely to cause widespread difficulties for households.