Annual UK house price growth slowed to 2.7% in May, down from 3.9% in April, latest data from the Office for National Statistics reveals.
The average UK property was valued at £271,000, with the latest figures remaining provisional and subject to revision.
The ONS attributed the slowdown to a base effect following the stamp duty changes introduced in England and Northern Ireland in April 2025. Prices rose by a smaller amount in May 2026 than during the sharp monthly increase recorded a year earlier.
Scotland recorded the strongest growth among Great Britain’s nations, with prices increasing by 4.4% to an average of £196,000.
Average prices rose by 4.2% to £215,000 in Wales and by 2.3% to £292,000 in England.
RENTS INCREASING
Separate ONS figures showed that average UK private rents increased by 3.3% in the 12 months to June, unchanged from the annual rate recorded in May.
The average monthly private rent reached £1,388 across the UK. In England, rents increased by 3.4% to an average of £1,446 per month. Wales recorded the strongest national rental growth, with average rents rising by 4.9% to £843. Average rents in Scotland increased by 1.3% to £1,012.
The latest available figures for Northern Ireland cover the 12 months to April, during which average rents rose by 2.9% to £877.
Within England, the North East recorded the highest annual rental inflation at 6.3%, while London had the lowest rate at 2.2%.
ELEVATED MORTGAGE RATES
Richard Donnell, executive director of research at Zoopla, said: “Political change, the World Cup, a scorching summer and elevated mortgage rates have hit housing market activity this summer.
“Zoopla’s very latest data shows 20% fewer buyer enquiries than a year ago and 7% fewer sales agreed. This comes as annual house price growth in the ONS index has already slowed to 2.7% in the 12 months to May. We expect activity to pick up in the autumn as the outlook becomes clearer.”
RESILENT MARKET
Lee Williams, national sales manager at Saffron for Intermediaries, said: “June’s figures suggest the housing market continued to show resilience despite a backdrop of economic and political transition.
“With Andy Burnham entering office this week Prime Minister, the market will inevitably be watching how the new government approaches housing and the wider economy. While affordability remains a challenge, demand has held up well, supported by continued competition between lenders and a steady flow of buyers.
“With housing supply still constrained in many parts of the country, upward pressure on prices has persisted.
“Attention will now turn to next week’s Bank of England interest rate decision and what it means for borrower confidence in the months ahead. As lenders continue to refine products and criteria, particularly for borrowers with more complex income or circumstances, there are still good opportunities available. “
GAME OF TWO HALVES
Ben Nichols, CEO of RAW Capital Partners, said: “This annual house price growth straddles two markedly different six-month periods.
“The second half of 2025 was defined by a sense of relative calm and stability, with inflation largely under control and interest rates steadily falling.
“In the past six months, by contrast, we have witnessed significant geopolitical and economic uncertainty, which has impacted swap rates and, in turn, the lending market.
“Throughout it all, the housing market has evidently remained resilient, and though recent volatility has undoubtedly impacted buyer confidence, we are still seeing notable interest in UK residential property from both domestic and overseas investors.
“As ever, the devil is in the detail, and the regional differences within today’s ONS data are noteworthy. For instance, average property prices in London have fallen by 3.7% since May 2025, while those in the North East have jumped 5.9% in that time.
“In our work with brokers and borrowers, it’s important that lenders recognise these market trends. Ultimately, it underlines why a flexible approach to assessing mortgage applications is so important – as “uncertainty” remains a watchword across the property industry, pragmatism is a vital quality in providing much-needed certainty to those seeking mortgages for themselves or their clients.”
GEOPOLITICAL UNCERTAINTY
Chris Storey, CCO at Atom bank, said: “House prices are continuing to feel the effects of events outside of the market itself. The conflict in Iran, and the resulting impact on interest rate forecasts, has understandably led some potential buyers to pause their plans, and that is feeding through into the modest growth we are seeing currently. With the ceasefire failing, that uncertainty is likely to carry on.
“Despite these challenges, recent analysis from the Royal Institution of Chartered Surveyors (RICS) suggests the market is stabilising, with some improvements seen on new buyer enquiries and agreed sales. Mortgages are becoming far more competitive too, with Moneyfacts reporting the biggest fall in average rates in two years between June and July.
“The new Prime Minister, Andy Burnham has promised a dramatic improvement in the number of council houses built across the country, but he will also need to oversee an improvement in the number of private developments if we are to ensure home ownership becomes more affordable and achievable.”
AFFORDABILITY CONCERNS
Tomer Aboody, founding director of specialist lender MT Finance, said: “The increase in average property values over the past 12 months is all the more surprising given tough market conditions but reflects softer values a year ago following the end of the stamp duty holiday.
“The reality now is that buyers are more cautious and not prepared to pay over-the-odds, particularly when they have so much choice available to them.
“The high cost of living means lack of affordability is the overriding concern for many, particularly first-time buyers and those purchasing in more expensive parts of the country such as London and the southeast. Lack of encouragement from the government has fuelled hesitation in both buyers and sellers, with many pausing and taking a ‘wait and see’ approach.
“With further reductions in base rate on hold for the foreseeable future, and higher stamp duty due to the lack of any concessions from the government, there is little incentive to make a move unless you really have to. With mortgage rates edging upwards again, needs-based buyers who have to move are taking on higher loan-to-values in order to be able to purchase.”
