New data from Rightmove shows that average asking prices rose by £2,335 in May, which marks a 0.6% monthly increase. This has pushed the national average up to a record £379,517. However, despite reaching a new high, this was the smallest rise seen in May since 2016, suggesting the market is cooling and currently leans in favour of buyers.
Rightmove attributes much of this increase to a notable rise in the number of new property listings, which jumped by 14%—the biggest year-on-year increase in the past ten years. With more homes coming onto the market, sellers are now facing tougher competition.
At the same time, buyer demand appears to be softening. Factors such as higher mortgage rates, ongoing global trade uncertainties, and recent stamp duty changes are contributing to more cautious behaviour among buyers.
Commenting on the findings, Rightmove’s property expert Colleen Babcock said: “This month’s price increase being the lowest in May for nine years is a sign of a market that favours buyers.” She added that sellers should be mindful of the increased competition and the need to stand out to attract interest from potential purchasers.
Buyers cautious amid economic uncertainty
While average listing prices rose overall, buyer demand dipped in April. This slowdown followed the reduction in stamp duty thresholds in England and Northern Ireland. Figures from Nationwide revealed that average house prices dropped by 0.6% last month.
Much of the hesitation in the market was attributed to international uncertainty, including concerns over former President Trump’s tariff plans, as well as speculation surrounding a potential interest rate cut by the Bank of England. However, market activity began to pick up again in May, aided by a rate cut to 4.25%. This reduction helped bring the average two-year fixed mortgage rate down to 3.72%, compared to 4.75% this time last year.
Despite ongoing economic pressures, the UK housing market has remained unexpectedly robust. Fears of a recession and rising interest rates had cast doubts, but figures from the Office for National Statistics showed a 5.4% year-on-year increase in house prices as of February, bringing the average value to £268,000.
Looking ahead, Knight Frank has forecast a 3.5% increase in house prices for 2025. This outlook is based on expectations of lower interest rates and a slow but steady improvement in household incomes.
Several factors are contributing to the increased number of homes coming onto the market. These include landlords choosing to exit the sector, homeowners looking to complete sales before further stamp duty changes, and others revisiting delayed moving plans after political instability last year. According to Tom Bill, head of UK residential research at Knight Frank, these trends are shaping today’s property landscape.
Nonetheless, the housing supply pipeline remains under strain. The government’s goal to build 300,000 homes annually is now being questioned. One major concern is the sharp decline in off-plan property sales, which dropped to 31% in 2024. This marks the lowest level since 2012 and sits far below the peak of 49% recorded in 2016.
David Fell, an analyst at Hamptons, explained that housebuilders depend heavily on forward funding to progress with developments. The falling interest in off-plan purchases—especially from small-scale landlords—is now threatening future construction and could hinder Labour’s broader housing targets.
As we move into the summer months, both buyers and sellers will be keeping a close eye on interest rate shifts, new policy announcements, and inflation trends to assess how much longer current price gains can be sustained.
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