UK house prices rose more than anticipated in May, driven by resilient economic fundamentals such as strong wage growth, low unemployment, and easing mortgage costs, according to the latest data from Nationwide.

The average residential property price increased by 0.5% from April to May, reaching £273,427. This nearly offset the 0.6% decline recorded in April. On an annual basis, prices rose by 3.5%, up from 3.4% the previous month—both figures surpassing economists’ expectations, who had forecast a 0.1% monthly rise and a 2.9% annual gain.
Nationwide’s chief economist Robert Gardner pointed to a stable environment for homebuyers. “Unemployment remains low, earnings are rising at a healthy pace, household balance sheets are strong, and borrowing costs may decline further if the Bank of England continues to lower interest rates, as widely anticipated,” he said.
Elliott Jordan-Doak of Pantheon Macroeconomics noted that the feared slowdown following April’s stamp duty changes has not materialised. The reversion to pre-2022 stamp duty thresholds led to a short-term rush to close transactions, but housing demand has held steady since.
First-time buyers are among those affected, now paying stamp duty on homes priced over £300,000 instead of the previous £425,000 threshold. Despite this, the market has stayed buoyant, supported by improving economic sentiment, including progress in UK-US trade relations.
Jordan-Doak expects house prices to grow by 4.5% over the year.
Helping boost buyer confidence, UK wages have outpaced inflation for nearly two years, and mortgage rates are gradually easing. In May, the Bank of England reduced interest rates by 0.25 percentage points—its fourth such cut since mid-2024—bringing the rate down to 4.25%. Further reductions are expected later this year.
Jonathan Hopper, CEO of Garrington Property Finders, said the housing market is regaining its balance. “With the stamp duty distortions behind us, the market is returning to a more stable dynamic, where prices are once again shaped by supply and demand.”