House prices have dropped compared to last year, but there are signs things may be looking up in some parts of the country.

The average price tag on a house in England and Wales is now £356,014. That’s according to the latest figures from property experts e.surv, who say prices have dipped by 0.2% in the last month, and are a whopping 3.3% lower than in May 2022.

This means the average homebuyer is looking at paying around £12,000 less for their property than they would have done a year ago.

North East Bucks the Trend

But it’s not all doom and gloom. While prices are still lower than their peak in October 2022, the North East has become the first region to break free from falling prices.

Interest Rate Worries

Richard Sexton, boss at e.surv, says that the Bank of England’s decision to hold back on interest rate cuts has hit buyers hard. He explained: “The pushing back of previously expected interest rate cuts by the Bank of England and the subsequent upward repricing of mortgage rates by lenders, has meant any anticipated help for borrowers has been short-lived.”

North-South Divide

The cost of living crisis, coupled with higher interest rates, has hit some areas harder than others. London and the South East are feeling the pinch the most, with house prices remaining stubbornly high.

Sexton says this is down to a few factors – the already high property prices in these areas, the fact it’s harder to borrow money, and because these regions rely heavily on mortgages. It’s first-time buyers who are really struggling to get a foot on the property ladder, particularly in these areas.

Election Promises

There could be some help on the horizon for first-time buyers, with political parties promising to offer support in the run-up to the next election.

A Mixed Picture

However, the latest data from e.surv paints a mixed picture of the housing market. While inflation remains a concern, there are some positive signs. More homes are being listed for sale, people are feeling more confident about their finances and, after taking seasonal adjustments into account, the number of houses being sold is also going up.

First-Time Buyers Feeling the Strain

Despite this, first-time buyers are still facing an uphill battle. Last year, just 287,000 people managed to buy their first home with a mortgage, compared to a long-term average of 389,000.

Market Remains Fragile

Overall, the experts at e.surv say that until the Bank of England starts to lower interest rates and there’s more certainty after the election, the housing market is likely to remain shaky.