Some feared stamp duty changes at the end of March would pour cold water on the property market, but house prices have proved resilient so far.
Prices rose by 0.5% on a monthly basis and 3.5% on an annual basis in May, according to Nationwide, bringing the average UK property to £273,427. Separate data from Zoopla suggests transactions haven’t dried up either. The number of sales agreed over the month was at its highest level for four years, up 6% on last year.
Halifax’s latest report paints a slightly less positive picture, but the overall story is still one of resilience. The bank reported a 0.4% drop in prices in the month of May following a “modest rise” of 0.3% in April, however the annual rate of growth remained fairly solid at 2.5%. This means the average home is worth around £7,000 more than a year ago.
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“These small monthly movements point to a housing market that has remained largely stable,” said Amanda Bryden, head of mortgages at Halifax. “The market appears to have absorbed the temporary surge in activity over spring, which was driven by the changes to stamp duty.”
We will have to wait a little longer for official figures from HM Land Registry to confirm this picture, as its data is published with a two-month time lag. The latest report covering March shows the period immediately before the stamp duty changes, when prices rose by 6.4% annually.
First-time buyers now begin paying the controversial property tax on homes worth more than £300,000, down from £425,000 previously. Meanwhile, home movers have seen the tax-free threshold drop from £250,000 to £125,000.
“Affordability remains a challenge, with house prices still high relative to incomes. However, lower mortgage rates and steady wage growth have helped support buyer confidence,” Bryden added. “The outlook will depend on the pace of cuts to interest rates, as well as the strength of future income growth and broader inflation trends.”
The Bank of England has cut interest rates four times since last summer, bringing the base rate to 4.25%, down from a peak of 5.25%. More attractive mortgage rates are available as a result, with sub-4% deals re-entering the market.
Regional house price variations
Naturally, there are regional variations when it comes to house price growth.
A recent special report from Nationwide found that rural areas have outpaced urban areas in recent years. Between December 2019 and December 2024, house prices in predominantly rural areas increased by 23%, compared with 18% in areas that are largely urban.
“The pandemic had a significant impact on housing demand during 2021 and 2022, with a shift in preferences towards more rural areas, particularly amongst older age groups. Whilst these effects have now faded, less urban areas have continued to hold the edge in terms of house price growth,” said Robert Gardner, chief economist at Nationwide.
Among the UK nations, prices are growing at the fastest rate in Northern Ireland (9.5% annually), according to the latest report from HM Land Registry. England comes in second (6.7%), followed by Scotland (4.6%) and Wales (3.6%).
Of the English regions, Yorkshire and the Humber is experiencing the fastest growth (9.5%). London saw the lowest level at 0.8%. Prices in London are particularly high, with the average house now costing over £552,000. This suggests affordability limits have become stretched.
Using the “house prices in your area” report from the Office for National Statistics can help you understand how prices have changed in your borough or local authority area.
Are property asking prices going up?
Asking prices are a useful barometer for market sentiment as it currently stands. These snapshots tend to be published only a few weeks after the data was recorded. The drawback is that asking prices don’t necessarily reflect the final sold price.
Rightmove data shows asking prices hit a record high in the first few weeks of May, with the average listing price now coming to £379,517. However, this monthly increase of 0.6% was the lowest growth rate recorded at this time of year since 2016.
This suggests that, although the property market is proving resilient, sellers need to be cautious when setting an asking price. The number of homes for sale is currently at a 10-year high, meaning buyers have plenty of choice and can shop around for their dream home.
“Sellers need to be aware of the level of competition they’re facing for the attention of buyers, and the prices that are being advertised in their location,” said Colleen Babcock, property expert at the website.
“In the current market, buyers may well have several similar homes to choose from in their area, and a home which appears overpriced compared to the competition may not get a second look.”
Will house prices rise in 2025?
Despite the uncertain economic backdrop, experts are cautiously optimistic about the property market going forward. Real estate consultancy Knight Frank recently upgraded its forecast from 2.5% to 3.5% for annual house price growth in 2025. Savills is predicting 4%.
Regional variations are likely, with prices forecast to rise more rapidly in the north than the south. Savills expects growth of 5% in the North West, the North East, Scotland, and Yorkshire and the Humber. Prices in the East of England and the South West are forecast to increase by 2.5%. This divergence can largely be explained by affordability.
“Housing market activity and house price inflation are currently strongest in areas where homes are more affordable. In broad terms, this covers most areas outside the southern regions of England,” said Richard Donnell, executive director of research at Zoopla.
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Katie has a background in investment writing and is interested in everything to do with personal finance, politics, and investing. She enjoys translating complex topics into easy-to-understand stories to help people make the most of their money.
Katie believes investing shouldn’t be complicated, and that demystifying it can help normal people improve their lives.
Before joining the MoneyWeek team, Katie worked as an investment writer at Invesco, a global asset management firm. She joined the company as a graduate in 2019. While there, she wrote about the global economy, bond markets, alternative investments and UK equities.
Katie loves writing and studied English at the University of Cambridge. Outside of work, she enjoys going to the theatre, reading novels, travelling and trying new restaurants with friends.
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