House price growth slows in May – Nationwide

The UK’s house price growth slowed in May, and prices fell for the first time this year amid a cooling market, Nationwide reveals.

It said annual house price growth eased to 1.7%, down from 3% in April, while prices slipped by 0.6% month on month.

The average house price was £278,024 in May, compared with £278,880 in April.

Housing has proved resilient

Robert Gardner, Nationwide’s chief economist, said: “Given the uncertainty caused by developments in the Middle East and the subsequent rise in energy prices and market interest rates, some loss of momentum was to be expected.

“There has been some positive news, in that the UK economy entered this shock on a slightly stronger footing than expected.

“The economy grew by a healthy 0.6% quarter on quarter in the first three months of the year, while inflation softened more than expected in April.”

He added: “Housing affordability had been improving steadily in recent years due to a combination of income growth outpacing house price growth by a wide margin and a modest decline in borrowing costs.”

Property sector reaction to Nationwide house price news

Nathan Emerson, the CEO of Propertymark, said: “Stable house prices will be welcomed by many buyers and sellers looking for greater certainty in the market after a prolonged period of economic volatility.

“Buyers who need to move are continuing to act decisively, particularly where mortgage rates have stabilised, and supply levels remain constrained.”

Marc von Grundherr, a director of Benham and Reeves, said: “A monthly dip in house prices shouldn’t be mistaken for a market downturn.

“Buyers remain active, transaction levels are holding firm and house prices remain higher than they were this time last year.

“Yes, the landscape may be more challenging, but despite wider economic angst, higher mortgage rates and stubborn inflation, homebuyers are continuing to make their move when the right opportunity presents itself.”

Verona Frankish, the CEO of Yopa, said: “It’s important to judge the health of the property market with a long-term view and the bigger picture remains one of stability, with house prices still higher than they were a year ago.

“Whilst we may have seen a marginal decline in property values on a monthly basis, this is unlikely to materialise into a long-term trend given we’re now entering peak selling season when the market really heats up.”

Tom Bill, the head of UK residential research at Knight Frank, said: “This is further evidence that the housing market slowed down at precisely the time of year when you would expect momentum to be building.

“There won’t be a cliff-edge moment, but the impact of higher borrowing costs will erode spending power and squeeze house prices this year as mortgage rates agreed before the Middle East conflict gradually disappear.

“With the Bank of England likely to sit on its hands for the foreseeable future, we expect minimal house price growth in 2026, with uncertainty around the Budget and ideological direction of the government likely to keep a lid on activity.”

Rachel Springall, a finance expert at Moneyfactscompare.co.uk, said: “Affordability remains a key issue for would-be buyers.

“Not only have house prices risen by almost £14,000 over the past two years alone, but higher mortgage rates, inflationary pressures and a lack of affordable housing create a challenging environment.

“Due to an unsettled outlook, borrowers are more hesitant to make big financial decisions, as shown in weaker new buyer enquiries, revealed by RICS.

“Buyers who can afford a mortgage, though, will have bargaining power on their side.”