Annual house price growth in the UK edged slightly higher in May to 3.5%, up from 3.4% in April, according to the latest Nationwide House Price Index. Seasonally adjusted data showed house prices rose by 0.5% month on month, taking the average UK home to £273,427, up from £270,752 the previous month.
Commenting on the data, Robert Gardner, chief economist at Nationwide, said: “Annual UK house price growth was marginally stronger in May at 3.5%, compared with 3.4% in April. House prices rose by 0.5% month on month, after taking account of seasonal effects.”
Gardner added that a sharp rise in transactions was recorded in March, driven by buyers aiming to complete purchases ahead of stamp duty changes. “Owner occupier house purchase completions were around twice as high as usual and the highest since June 2021,” he said.
He noted that, despite the end of the stamp duty holiday, mortgage approvals and wider activity remained resilient, supported by low unemployment, rising earnings, and expectations that borrowing costs may fall further in the coming quarters.
Nationwide’s figures also highlighted a continued divergence between urban and rural property performance. “House prices in predominantly rural areas increased by 23% between December 2019 and December 2024, compared with 18% in more urban areas,” said Gardner. While the pandemic drove a surge in demand for rural properties, he said these areas have “continued to hold the edge in terms of house price growth.”
He noted that the majority of moves over the past five years were within the same type of area, though older movers—particularly those aged 55 and above—showed a marked preference for rural areas.
Nathan Emerson, CEO at Propertymark, said: “It is reassuring to witness consistent house price growth and a strong appetite as people continue to approach the homebuying and selling process, especially when the UK economy continues to adapt to both domestic and international events.”
Amy Reynolds, head of sales at Antony Roberts, said demand remained stable: “We’re seeing a flight to quality – buyers are more selective and price-sensitive but still transacting where values align with lifestyle. The key challenge is affordability. Mortgage rates, higher stamp duty and, for some, the increased cost of private school fees, is affecting many families who would like to move, but are unable to.”
Mark Harris, chief executive at SPF Private Clients, said: “Lenders have been reducing mortgage rates and enhancing loan-to-incomes, increasing the size of loan that some borrowers can access. However, while the borrowing environment may be easing, higher inflation and the wider economic picture remains a concern.”
Ryan Etchells, chief commercial officer at Together, added: “House prices have returned to monthly growth, defying expectations of an extended slowdown… affordability challenges may persist, particularly for first-time buyers and financially stretched households.” He warned that more landlords could exit the market, citing research showing 11% plan to do so in 2025, with 13% blaming affordability pressures.
Tomer Aboody, director at MT Finance, said the spike in completions before March created a slowdown that may persist. “If the Government wants to stimulate the property market, and wider economy at the same time, it must reduce stamp duty,” he said. “A healthy market with plenty of transactions, rather than rising prices, is a must for any government pushing a growth agenda.”
Further reaction
Jason Tebb, president of OnTheMarket:
“Even though a considerable number of buyers brought forward transactions to take advantage of the stamp duty concession before it ended in March, there is still plenty of activity in the market now the incentive is no longer available. Average house prices remain relatively steady although there are regional differences and an urban/rural divide exacerbated by the pandemic.
“With the stamp duty holiday no longer available, other inducements, such as interest rate reductions, are even more essential. Four quarter-point base-rate cuts since last August have noticeably boosted buyer and seller confidence. Further reductions will give added impetus to the market as we move into summer and the rest of the year.
“Affordability pressures remain, despite rate reductions, with inflation proving stubborn and the high cost of living. Lenders have been trimming mortgage rates and easing criteria in recent weeks which should help a little, giving buyers who rely on mortgages more wiggle room.”
Jonathan Handford, managing director at national estate agent group Fine & Country:
“House prices rose in May, reversing the decline seen in April and offering a tentative sign of resilience in the housing market.
“The uptick follows a cooling period triggered by the stamp duty changes, which had pulled demand forward as buyers rushed to beat the revised threshold.
“In the weeks that followed, the market appeared to settle into a lull, leaving the market quieter in April. But May’s price growth suggests interest is picking up again, though conditions remain mixed.
“Inflation climbed to 3.5% in April, keeping pressure on household budgets. In response to broader economic concerns, the Bank of England cut interest rates in May to 4.25%, aiming to ease borrowing costs and support growth. This move could help some homeowners and buyers, but with inflation still above target, the path forward is uncertain.
“Affordability remains a key challenge, especially for first-time buyers. Rising prices, higher deposits, and tougher lending conditions continue to keep many people on the sidelines. To truly boost demand, more support is needed, such as help for first-time buyers, tax breaks, or new schemes to make ownership more accessible.
“That said, rising prices may not be felt evenly across the country. Some areas could still see adjustments, creating chances for buyers who’ve been priced out in the past. If borrowing becomes more affordable and inflation begins to ease, we could see more people return to the market later this year.
“For now, May’s price increase shows the housing market is trying to stabilise after months of change. What happens next will depend on the broader economy and whether more is done to make buying a home achievable for more people.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“The historically-accurate Nationwide house price index was one of the first to reflect the change in market dynamics since the stamp duty holiday ended in March.
“But now it is showing that activity has settled since that time with the significant increase in supply, which now comfortably exceeds demand, keeping prices in check. Underlying confidence too has not disappeared as these latest figures evidence.
“Buyers and sellers are coming to terms with the ‘new normal’ as employment strength outweighs economic worries and doing their best to keep deals alive.”
