Just £130 fell from the average house price across the UK in May, but broader figures from the Halifax reveal the first drop in house values, year-on-year, since 2012.

In a month when, according to the Financial Conduct Authority, more than 100,000 households are due to come to the end of their fixed-rate deals, homeowners are wrestling with the dilemma of renewing with deals at far higher rates or taking the strain of being moved on to their existing lender's standard variable rate.

A record number of morgages (19%) are consequently being arranged for terms of 35 years or longer, the Guardian reports today, in an attempt to take some of the pain out of monthly repayment figures. The figure marks the highest proportion of loans agreed since 2005, when records began.

The average price for a home, says the Halifax, now stands at £286,532 (compared to £286,662 in April), although detached properties are continuing to post a "modest" growth. Prices overall remain flat, at 0%, following a 0.4% fall in April, with the biggest downward pressure on value being in the south of England.

Kim Kinnaird, Halifax Mortgages director, said: "The annual rate of growth fell to -1.0%, marking the first time since 2012 that house prices have fallen year-on-year. Given the effectively flat month, the annual decline largely reflects a comparison with strong house prices this time last year, as the market continued to be buoyant heading into the summer."

She added: "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. Therefore further downward pressure on house prices is still expected."

Despite the Halifax perspective today though, a Gloucestershire estate agency told Punchline that the picture for property sales is more complex than headlines suggest – with much reason for optimism persisting.

Jonathan Ashton, sales director for Dursley-based Bennett Jones, said: "On balance, today's survey suggests there has been little growth over the last 12 months, which would be expected after a strong period of growth.

"Back in March 2020, amid speculation that the market would fall, the reality was that, as soon as restrictions lifted, sales began to fly. They did so all the way until Liz Truss became PM and the subsequent budget caused the market to slow.

"The budget, with the earlier cooling in the market, was possibly a benefit rather than prices continuing to grow exponentially over the next few years and then requiring a larger correction, which was seen in the years after 1988 and 2008."

In a broader context, and given a degree of "overheating", today's "correction" in pricing has been needed, he said.

"As a company and also looking at national trends, the market became very quiet until January and then led to a very busy patch for three months, akin to the post-pandemic surge," he added.

"The market has since remained stable and some of what we see today is about vendors being confronted with a reality check in terms of marketing their homes. With that adjustment on expectation made, better news could be coming soon in the sales pipeline."

The Halifax notes that existing houses continued to fall in value with an annual growth of -1.9%, whereas prices for new build properties are still rising at +2.8%, albeit at the weakest rate for nearly three years.

By property type, all except for detached houses (+0.4%) have registered year-on-year declines. The sharpest drop is for flats (-1.9%), followed by terraced (-1.0%) and semi-detached houses (-0.5%).

In the regional stakes, the South West takes second place for the biggest annual fall with data showing a -1.4% drop and average price of £301,079 on transactions, while the South East (-1.6%, average price £385,943) faired even worse. Greater London prices are down by -1.2% (average price £536,622).

Except for Wales (unchanged at +1.1%, average price £218,365), all areas of the UK have seen annual house price growth weaken in May compared to April, with most now recording a low single-digit rate of property price inflation.

As pockets of resistance, the West Midlands (+2.7%, average price £251,137) remains the best performing region, followed by Yorkshire & Humberside (+2.3%, average price £205,035).

Ms Kinnaird added: "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."