After a 0.5% fall the previous month, Natonwide’s HPI reveals that house prices rose by 0.5% in May and by 3.5% on an annual basis with the average hitting £273,427.
The rise comes despite the ending of the Stamp Duty holiday on April 1st and the financial uncertainty unleashed by Trump’s tariffs, with many in the industry citing recent reductions in the base rate as a key driver of the market’s resilience.
Mortgage approvals data suggests that market activity appears to be holding up well.”
An upbeat Robert Gardner (pictured), Nationwide‘s Chief Economist, says: “Mortgage approvals data suggests that market activity appears to be holding up well following the end of the Stamp Duty holiday. Despite wider economic uncertainties in the global economy, underlying conditions for potential home buyers in the UK remain supportive.
“Unemployment remains low, earnings are rising at a healthy pace (even after accounting for inflation), household balance sheets are strong and borrowing costs are likely to moderate a little if Bank Rate is lowered further in the coming quarters as we, and most other analysts, expect.
The data shows average house price growth has been more prominent in rural locations, which continues to outpace more urban areas. According to Nationwide: “The pandemic had a significant impact on housing demand during 2021 and 2022, with a shift in preferences towards more rural areas, particularly amongst older age groups. Whilst these effects have now faded, less urban areas have continued to hold the edge in terms of house price growth.”
Industry reaction
Amy Reynolds, head of sales, Antony Roberts
Amy Reynolds, Head of Sales at Richmond estate agency Antony Roberts, says: “Since the end of the Stamp Duty holiday, we have seen stable transaction volumes reflecting the ongoing resilience of the housing market despite continued economic uncertainty.
“We’re seeing a flight to quality – buyers are more selective and price-sensitive but still transacting where values align with lifestyle. It’s also clear that while high mortgage rates have cooled the market, demand remains underpinned by low supply in many areas.
“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.”
Verona Frankish, Chair of WIEA
CEO of Yopa, Verona Frankish, takes a similar view: “Not only has the market benefited from a degree of post-Stamp Duty deadline stability, but the reduction in the base rate seen at the start of May has also helped to drive buyer activity, as those looking to make their move continue to benefit from improving affordability where mortgage rates are concerned.
“Whilst the general expectation is that the base rate will be held this month, this is unlikely to deter the nation’s homebuyers, who remain keen to transact despite interest rates sitting higher than they may have become accustomed to in recent years.”
This momentum has only intensified following a renewed wave of buyer and seller activity as the Stamp Duty dust has settled.”
Jean Jameson, Chief Sales Office for Foxtons
Chief Sales Office for Foxtons, Jean Jameson, says: “The market continues to make positive strides forward, with the rate of house price growth accelerating on both a monthly and annual basis.
“This momentum has only intensified following a renewed wave of buyer and seller activity as the Stamp Duty dust has settled, strengthening what has so far been a very busy first half of the year for the UK property market.”
Affordability pressures remain
Jason Tebb, President of OnTheMarket
Jason Tebb, President of the portal OnTheMarket says: “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.”
Nathan Emerson, Chief Executive, Propertymark
Nathan Emerson, CEO at Propertymark is another who highlights the role of the base rate, commenting: “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.
“With the rate of inflation still very much in sharp focus, it will be interesting to see what direction of travel the Bank of England may take regarding base rates when they meet again next week.
It will be interesting to see what direction of travel the Bank of England may take regarding base rates when they meet again next week.”
“Ultimately it would be welcome news for consumers should there be any further base rate cuts, however, the Monetary Policy Committee will likely be approaching any decision with extreme caution, especially considering many economists are predicting inflation to further rise.”
Iain McKenzie, The Guild of Property Professionals
Iain McKenzie, CEO of The Guild of Property Professionals, says: “Stock levels remain at a 10-year high for this time of year, meaning that while seller sentiment appears strong, pricing realism is key. With more choice available to buyers, correctly pricing from the outset is essential to attract attention and secure sales.”
A note of caution
Mark Harris, Chief Executive of mortgage broker SPF Private Clients, however, takes a more cautious approach: “Last month’s interest rate cut from the Bank of England gave the housing market and wider economy a timely boost following the end of the Stamp Duty concession.
Mark Harris, CEO, SPF Private Clients
“Lenders have been reducing mortgage rates and enhancing loan-to-incomes, increasing the size of loans that some borrowers can access. However, while the borrowing environment may be easing, higher inflation and the wider economic picture remain a concern, which could mean the pace and size of further base rate reductions is more gradual than markets thought only a few weeks ago.”
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