House prices have slumped 3.4pc over the last year as expected increases in interest rates weigh on the market.

The sharp decline from a 2.7pc annual fall in April comes as the Bank of England is forecast to raise interest rates to 5.5pc by the end of the year, amid rising core inflation in the UK.

House prices unexpectedly fell for the eighth time in nine months in May, throwing doubts on the stability of the property market.

Property prices edged down 0.1pc compared with April, according to the lender Nationwide, with the average property now worth £260,736.&nbsp;

Prices had ticked up by 0.5pc in April after seven consecutive months of decline previously.

Prices are down 4pc compared with the most recent peak in August 2022, and fell 3.4pc in May on an annual basis.

House prices have slumped 3.{ai:summary}<p>UK house prices have seen their sharpest fall in a year as increases in interest rates loom. The expected 5.5% rate could hit the unstable property market hard. Prices have fallen for eight out of the last nine months, plunging 3.4% over the last year. #economy</p>

House price drop deepens in May, says Nationwide - latest updates

Loading...