House price growth recovers in May: Nationwide

Monthly UK house price growth returned to positive territory in May with a rise of 0.5% compared to April’s 0.6% dip, according to the latest Nationwide house price index.

Annual growth also increased, edging up to 3.5% in May from 3.4% in April.

Robert Gardner, Nationwide's chief economist, said: “Official data confirmed that there was a significant jump in residential property transactions in March, with buyers bringing forward their purchases to avoid additional stamp duty costs. Owner occupier house purchase completions were around twice as high as usual and the highest since June 2021 (which was also impacted by stamp duty changes).

Nevertheless, 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."

Mark Harris, chief executive of mortgage broker SPF Private Clients, commented: “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.
 
“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, which could mean the pace and size of further base rate reductions is more gradual than markets thought only a few weeks ago."

Jonathan Handford, managing director at national estate agent group Fine & Country, added: “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.”