That puts average prices at £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.
“With consumer price inflation remaining stubbornly high, markets are pricing in several more rate rises that would take base rate above 5% for the first time since the start of 2008.
“Those expectations have led fixed mortgage rates to start rising again across the market.
“This will inevitably impact confidence in the housing market as both buyers and sellers adjust their expectations, and latest industry figures for both mortgage approvals and completed transactions show demand is cooling.”
Kinnaird said further downward pressure on house prices is still expected, adding: “One continued source of support to house prices is the labour market. While unemployment has recently ticked up from very low levels, brisk wage growth would over time help to improve housing affordability, if sustained.”
Nationwide’s House Price Index for May last week suggested average values fell 0.1% on a monthly basis and slipped 3.4% annually - the sharpest drop in 14 years.
Commenting on the data, Tom Bill, head of UK residential research at Knight Frank, said: “This is unlikely to be the last national house price index to fall into negative territory this year.
“Mortgage rates will keep edging up as wage growth keeps core inflation stubbornly high and we expect prices to fall by around 5% this year.
“However, this isn’t the global financial crisis part two for house prices and any decline will be kept in check by rising wages, low unemployment, cash sales, record-high levels of housing equity, longer mortgages and savings amassed during the pandemic. The UK housing market is coming back down to earth after a strong three years, not falling off a cliff.”
Jason Tebb, chief executive of OnTheMarket, added: “With the first annual decline in prices for over a decade, it is clear that the high cost of living, recent disappointing inflation news and the likelihood of further rate rises will impact what buyers are willing to pay for their next home.
“This news should be taken, however, in the context of the unprecedented post pandemic house price growth, fuelled by a lack of supply and pent up demand - property prices are still, on average, £25,000 above the level of 2 years ago.
“Despite recent mortgage volatility, there will always be buyers who need, or want, to move and are committed to doing so.
“The advice of an expert local estate agent is essential in making sure that property sellers are pricing realistically to ensure that their expectations on timeframes are met - pricing too optimistically could mean lower levels of buyer interest in this price-sensitive market.”
The RICS data shows that demand, agreed sales and short-term sales expectations remained negative, although less downbeat during the month, according to the report.
At the twelve-month time horizon, the sales expectations net balance stands at +2%, while new instructions rose by a net balance of +14% of survey participants during May.
This breaks a run of thirteen successive negative monthly readings and marks the strongest reading for the new listings metric since March 2021.
A net balance of -30% of respondents cited a further fall in national prices in May. Even so, this measure has turned less negative in each of the past three reports, having hit a recent low of -46% in February, the RICS said.
RICS senior economist Tarrant Parsons, said: "The latest RICS UK Residential Survey feedback indicates a modest recovery in the sales market activity during May, with generally less negativity compared to the end of 2022.
“However, it seems storm clouds are gathered, with the UK's stubbornly high inflation likely undermining the recent improvement in activity by prompting the Bank of England to take further action through interest rate rises, leading to higher mortgage rates and ultimately reducing affordability and buyer demand.
“The banking sector appears to expect this with many banks and building societies already introducing products with higher interest rates.”