The pace of UK house price growth slowed during May, as higher mortgage costs, political uncertainty and changing market conditions continued to influence buyer confidence.
According to the latest figures from the Office for National Statistics (ONS), the average UK property price increased by 2.7% over the year to May, down from 3.9% in April. The average home across the UK is now valued at £271,000, highlighting that prices are still rising but at a more modest pace.
House Prices Continue to Rise Across Most of the UK
Although annual growth has slowed overall, house prices continued to increase across each nation of the UK.
In England, the average property value reached £292,000, representing annual growth of 2.3%. Wales recorded stronger growth, with average prices rising to £215,000, an increase of 4.2% over the past year.
Scotland also saw healthy growth, with average house prices climbing to £196,000, up 4.4% annually. Meanwhile, Northern Ireland recorded the strongest increase of all, with average prices reaching £198,000 during the first quarter of 2026 — a year-on-year rise of 7.4%.
Regional Picture Shows Mixed Performance
Performance varied considerably across England’s regions.
The North East recorded the strongest annual house price growth at 5.9%, continuing its strong performance compared with many other parts of the country.
London, however, remained the weakest-performing region. House prices in the capital fell by 3.7% compared with a year earlier, marking the ninth consecutive month of annual price declines. While demand remains high in certain areas of London, affordability pressures and higher borrowing costs continue to weigh on the market.
Market Activity Slows During Summer
Industry experts believe several factors have combined to reduce housing market activity over recent months.
Political uncertainty, the World Cup, unusually warm summer weather and elevated mortgage rates have all contributed to fewer buyers entering the market.
Recent data from Zoopla indicates that buyer enquiries are around 20% lower than they were a year ago, while agreed property sales have fallen by approximately 7%.
Many analysts expect activity to improve later in the year once economic conditions become clearer and seasonal distractions begin to ease.
Why House Price Growth Has Slowed
The ONS believes part of the slowdown is due to what economists describe as a “base effect.”
Following changes to stamp duty in England and Northern Ireland during April 2025, house prices experienced stronger monthly growth last year. Because prices rose much faster during that period, this year’s annual comparison naturally appears weaker.
Between April and May 2026, average UK house prices increased by just 0.3%, compared with 1.5% during the same period last year, resulting in a slower annual growth rate.
Rental Prices Continue to Increase
While house price growth has moderated, rents continue to move upwards.
The average monthly private rent across the UK reached £1,388 in June, representing an annual increase of £44, or 3.3%.
Although rental growth has eased compared with previous peaks, demand for rental accommodation remains strong in many parts of the country.
Inflation Falls, But Mortgage Rates Remain Under Pressure
Separate ONS figures showed that Consumer Prices Index (CPI) inflation slowed to 2.6% in June, down from 2.8% in May. This marks the lowest inflation rate since March 2025 and came in below many economists’ expectations.
Despite the encouraging inflation data, mortgage costs remain under pressure.
Recent geopolitical tensions have pushed swap rates higher, increasing funding costs for lenders. As a result, several major banks have already increased their fixed mortgage rates, with others expected to follow.
While many economists still expect the Bank of England to leave the base rate unchanged at its next meeting, borrowers are unlikely to see significant reductions in mortgage pricing until financial markets become more stable.
Buyers Face Tougher Affordability Decisions
Mortgage advisers say affordability remains one of the biggest challenges facing homebuyers.
Although lenders continue to compete for business, rising mortgage rates mean buyers need to think carefully about what they can comfortably afford rather than simply borrowing the maximum available.
Many advisers recommend securing a competitive mortgage deal early, particularly for buyers approaching the end of an existing fixed-rate product. Most lenders still allow customers to switch to a lower-rate product before completion if better deals become available later.
Sellers Must Price Realistically
With more homes now available on the market, buyers have greater choice than they have enjoyed for several years.
Property professionals say this makes realistic pricing more important than ever. Homes launched at sensible market values continue to attract interest and secure sales, while overpriced properties often remain unsold for much longer before requiring price reductions.
Outlook for the Housing Market
Despite softer house price growth, the UK housing market continues to demonstrate resilience.
Demand has cooled compared with previous years, but steady price growth outside London and continued activity across much of the country suggest the market remains fundamentally stable.
However, affordability concerns, higher mortgage costs and wider economic uncertainty are likely to keep both buyers and sellers cautious in the months ahead. Much will depend on future inflation trends, interest rate decisions and whether mortgage pricing begins to improve later in the year.
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