House prices across the UK experienced a slight rise in annual growth in May, reaching 3.5%, compared to 3.4% in April, one index reveals.
According to Nationwide, on a monthly basis, prices climbed by 0.5%, reflecting a seasonally adjusted rise from the previous month’s 0.6% decline.
The average home now costs £273,427, up from £270,752 in April.
Rural areas have seen stronger price growth than urban ones over the past five years.
Nationwide says that from December 2019 to December 2024, house prices in predominantly rural locations rose by 23%, compared to an 18% increase in urban areas.
Jump in residential property transactions
The lender’s chief economist, Robert Gardner, 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.”
He added: “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.”
Property sector reaction
Nathan Emerson, Propertymark‘s chief executive, 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.
“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.”
The chief sales officer for Foxtons, Jean Jameson, said: “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.”
The director of Benham and Reeves, Marc von Grundherr, said: “Whilst we saw the market take a momentary pause for breath following the stamp duty deadline, it’s clear that it’s back to business as usual, with the monthly rate of decline seen last month reversing and the annual rate of growth also accelerating in May.
“This was always to be expected and, so far, predictions of a positive year for the property market are ringing true, as we’re seeing consistently strong growth in mortgage approval volumes, more deals done and a strengthening in property values.”
Tom Bill, the head of UK residential research at Knight Frank, said: “There are tentative signs of momentum in the UK housing market after a slump in activity in April caused by higher rates of stamp duty but a dramatic rebound in prices doesn’t feel likely.
“Concerns around inflation and the government’s financial headroom mean mortgage rates don’t feel poised to drop meaningfully.
“Buyers also have a lot of properties to choose from this spring, which we expect to keep downwards pressure on prices in the short term.”