Annual house price growth eases to 1.9%: UK HPI

Average UK house prices increased by 1.9% in the 12 months to May, down from a revised 3.2% in April, according to the latest UK House Price Index from the ONS and Land Registy.

The average UK house price was £286,000 in May, which is £6,000 higher than 12 months ago, but £7,000 below the recent peak in September 2022.

Average house prices increased over the past year by 1.7% in England, 1.8% in Wales, 3.2% in Scotland, and 5.0% in Northern Ireland.

The North East saw the highest annual percentage change of all English regions in the 12 months to May (4.0%), while the East saw the lowest (0.0%).

On a seasonally-adjusted basis, the average UK house price decreased by 0.4% in May, following a month-on-month increase of 0.5% in April. On a non-seasonally adjusted basis, prices remained little changed in May, following a month-on-month increase of 0.6% in April.

Emma Hollingworth, managing director of mortgages at MPowered Mortgages, commented: “Given the steady rise in mortgage rates and high inflation levels, today’s figures are not unexpected. Buyer confidence has tempered in recent months, particularly with two-year fixed rates reaching the highest levels since the 2008 financial crash. However, we are beginning to see these rates stabilise. Moreover, with energy bills falling we can expect inflation to trend in a more manageable direction, boosting buyer confidence in the long run.

“It is particularly important to recognise the impact this period will have on first-time buyers, who are bearing the brunt of rising interest rates and are most stretched on affordability. While recent discussions on the Mortgage Charter reflect ongoing efforts from both the government and lenders to support those most impacted, first-time buyers should be seeking independent financial advice to work out how they can best achieve their homeownership goals."

James Briggs, head of intermediary sales at Together, said: “A further monthly dip in house prices is no shock. Recent spikes in mortgages have clearly knocked buyer confidence, with the ONS now reporting almost a third of households are struggling with repayments.

“But it’s not all doom and gloom. Demand for two-year fixed mortgages is on the up, now at highest level since 2008, as potential homeowners explore shorter-term fixed deals as a way onto the ladder. Here at Together, we’ve already seen a marked increase in bridging and short-term loans, as more people opt to downsize or move home sooner than planned to release cash to improve existing property, rather than move. and secure lower repayments. Most long term homeowners are asset rich but cash reserves are dwindling due to inflationary pressure, so identifying other areas where cash can be released will be key.

“Many will feel embittered by the headlines, but it’s important to recognise there are pockets of activity ticking over and the UK market is far more resilient than some perceive it.”