The average asking price for UK homes rose to a record £379,517 in May, according to Rightmove, despite signs of a cooling market as cautious buyers and a surge in listings dampen upward momentum.

The monthly increase of 0.6% – equivalent to £2,335 – is the smallest May rise since 2016 and reflects a more subdued spring market.

While seasonal factors typically drive higher prices in May, this year’s modest uptick underscores growing competition among sellers amid a decade-high supply of available homes.

Rightmove data shows that buyer demand dropped by 4% in April compared to the same month last year, the first year-on-year decline in 2025.

STAMP DUTY SURCHARGE

Analysts cite a combination of April’s stamp duty surcharge and uncertainty ahead of the Bank of England’s May rate decision as likely contributors.

Despite this, overall buyer enquiries remain 3% ahead of 2024 on a year-to-date basis, thanks to a stronger first quarter.

RATE BREAKER

Mortgage rates are emerging as the key variable for market sentiment heading into the second half of the year.

Rightmove’s mortgage tracker shows that the lowest available 2-year fixed rate has fallen to 3.72%, down from 4.75% a year ago.

The Bank of England’s second rate cut of 2025, announced earlier this month, is expected to apply further downward pressure on borrowing costs.

AFFORDABILITY

Improving affordability may also offer support. Average wages have risen by over 5% annually, outpacing house price growth, which now stands at just 1.2% year-on-year.

Meanwhile, the number of new homes coming to market is up 14% on last year, offering buyers a wider choice and greater leverage in price negotiations.

Despite a 5% annual rise in sales agreed during April, the imbalance between seller and buyer activity is increasingly evident.

Rightmove reports a 32% rise in the number of sellers changing estate agents in a bid to shift stagnant listings.

Homes requiring price reductions typically take over two months longer to sell, highlighting the risks of overpricing in a buyer-sensitive market.

BOUNCE-BACK

Colleen Babcock, property expert at Rightmove, said:  “Despite April’s dip in new buyer demand, there are early signs of a bounce-back in May.

“Mortgage interest rates are lower than they were at this time last year, and the recent Bank Rate cut also gives us some optimism for further mortgage rate drops that will enable more to buy.”

DRASTIC REDUCTIONS

And she added: “While we’re not expecting drastic reductions, any lowering of rates will be a boost to buyer sentiment and affordability.

“With a high number of sellers and a small dip in buyer demand, it’s worth reminding people out there thinking of coming to market that they need to work hard to attract buyer attention.”