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House prices were up 0.5% month-on-month, led by growth in in predominantly rural areas.

* Seasonally adjusted figure (note that monthly % changes are revised when seasonal adjustment factors are re-estimated)

Official data confirmed that there was a significant jump in residential property transactions in March, with buyers bringing forward their purchases to avoid additional stamp duty costs. Owner occupier house purchase completions were around twice as high as usual and the highest since June 2021 (which was also impacted by stamp duty changes).

“Nevertheless, mortgage approvals data suggests that market activity appears to be holding up well following the end of the stamp duty holiday. Despite wider economic uncertainties in the global economy, underlying conditions for potential home buyers in the UK remain supportive.

Robert Gardner, Nationwide’s Chief Economist, said: “Unemployment remains low, earnings are rising at a healthy pace (even after accounting for inflation), household balance sheets are strong and borrowing costs are likely to moderate a little if Bank Rate is lowered further in the coming quarters as we, and most other analysts, expect.

Nationwide’s recent special report identified that average house price growth in predominantly rural locations has continued to outpace more urban areas.  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.

Gardener added: “In our latest housing market survey, we focused on homeowners who have moved in the last five years. Our findings indicate that the majority (63%) of house moves were within the same type of area, with the biggest flow being within large towns or cities (as shown in the diagram above). Around 9% of moves were from towns/cities to rural areas (villages or hamlets), although this was partially offset by 7% who moved from rural to more urban areas.”

“However, amongst those who moved to a different type of area, there was a significant difference by age group, with younger people (those aged 25-34) tending to move to more urban areas, and older age groups, particularly 55+, favouring more rural areas (see chart at the bottom of the previous page).”

Industry reactions:

Nathan Emerson, CEO at Propertymark, commented: “It is reassuring to witness consistent house price growth and a strong appetite as people continue to approach the homebuying and selling process, especially when the UK economy continues to adapt to both domestic and international events.

“With the rate of inflation still very much in sharp focus, it will be interesting to see what direction of travel the Bank of England may take regarding base rates when they meet again next week. Ultimately it would be welcome news for consumers should there be any further base rates cuts, however the Monetary Policy Committee will likely be approaching any decision with extreme caution, especially considering many economists are predicting inflation to further rise.”

David Johnson, managing director of property consultancy INHOUS, commented: “Buyer demand picked up immediately after the bank holidays and has remained strong throughout May. This level of buyer motivation has resulted in the majority of sellers receiving multiple offers and achieving their asking price. One and two bedroom apartments remain particularly sought-after as well as larger family homes in and around commuter hotspots.”

Tom Bill, head of UK residential research at Knight Frank, said: “There are tentative signs of momentum in the UK housing market after a slump in activity in April caused by higher rates of stamp duty but a dramatic rebound in prices doesn’t feel likely. Concerns around inflation and the government’s financial headroom mean mortgage rates don’t feel poised to drop meaningfully. Buyers also have a lot of properties to choose from this spring, which we expect to keep downwards pressure on prices in the short term.”

Jean Jameson, chief sales office for Foxtons, commented: “The market continues to make positive strides forward, with the rate of house price growth accelerating on both a monthly and annual basis.

“This momentum has only intensified following a renewed wave of buyer and seller activity as the stamp duty dust has settled, strengthening what has so far been a very busy first half of the year for the UK property market.

“Whilst the expectation is that the Bank of England will hold the base rate at 4.25% this month, a heightened degree of mortgage provider competition has driven down rates in recent months and so we can expect buyer appetites to remain strong.”

Jason Tebb, president of OnTheMarket, said: “Even though a considerable number of buyers brought forward transactions to take advantage of the stamp duty concession before it ended in March, there is still plenty of activity in the market now the incentive is no longer available. Average house prices remain relatively steady although there are regional differences and an urban/rural divide exacerbated by the pandemic.

With the stamp duty holiday no longer available, other inducements, such as interest rate reductions, are even more essential. Four quarter-point base-rate cuts since last August have noticeably boosted buyer and seller confidence. Further reductions will give added impetus to the market as we move into summer and the rest of the year.

Affordability pressures remain, despite rate reductions, with inflation proving stubborn and the high cost of living. Lenders have been trimming mortgage rates and easing criteria in recent weeks which should help a little, giving buyers who rely on mortgages more wiggle room.”

Jeremy Leaf, north London estate agent, commented: “The historically-accurate Nationwide house price index was one of the first to reflect the change in market dynamics since the stamp duty holiday ended in March.

“But now it is showing that activity has settled since that time with the significant increase in supply, which now comfortably exceeds demand, keeping prices in check. Underlying confidence too has not disappeared as these latest figures evidence.

“Buyers and sellers are coming to terms with the ‘new normal’ as employment strength outweighs economic worries and doing their best to keep deals alive.”

Jonathan Handford, managing director at Fine & Country, said: “House prices rose in May, reversing the decline seen in April and offering a tentative sign of resilience in the housing market.

“The uptick follows a cooling period triggered by the stamp duty changes, which had pulled demand forward as buyers rushed to beat the revised threshold.

“In the weeks that followed, the market appeared to settle into a lull, leaving the market quieter in April. But May’s price growth suggests interest is picking up again, though conditions remain mixed.

“Inflation climbed to 3.5% in April, keeping pressure on household budgets. In response to broader economic concerns, the Bank of England cut interest rates in May to 4.25%, aiming to ease borrowing costs and support growth. This move could help some homeowners and buyers, but with inflation still above target, the path forward is uncertain.

“Affordability remains a key challenge, especially for first-time buyers. Rising prices, higher deposits, and tougher lending conditions continue to keep many people on the sidelines. To truly boost demand, more support is needed, such as help for first-time buyers, tax breaks, or new schemes to make ownership more accessible.

“That said, rising prices may not be felt evenly across the country. Some areas could still see adjustments, creating chances for buyers who’ve been priced out in the past. If borrowing becomes more affordable and inflation begins to ease, we could see more people return to the market later this year.

“For now, May’s price increase shows the housing market is trying to stabilise after months of change. What happens next will depend on the broader economy and whether more is done to make buying a home achievable for more people.”

Marc von Grundherr, director of Benham and Reeves, noted: “Whilst we saw the market take a momentary pause for breath following the stamp duty deadline, it’s clear that it’s back to business as usual, with the monthly rate of decline seen last month reversing and the annual rate of growth also accelerating in May.

“This was always to be expected and, so far, predictions of a positive year for the property market are ringing true, as we’re seeing consistently strong growth in mortgage approval volumes, more deals done and a strengthening in property values.”

Verona Frankish, CEO of Yopa, commented: “Not only has the market benefited from a degree of post-stamp duty deadline stability, but the reduction in the base rate seen at the start of May has also helped to drive buyer activity, as those looking to make their move continue to benefit from improving affordability where mortgage rates are concerned.

“Whilst the general expectation is that the base rate will be held this month, this is unlikely to deter the nation’s homebuyers, who remain keen to transact despite interest rates sitting higher than they may have become accustomed to in recent years.”

Iain McKenzie, CEO of The Guild of Property Professionals, added: “Today’s Nationwide figures, showing a marginal uptick in annual house price growth to 3.5% and a 0.5% monthly rise, paint a picture of a market steadily finding its equilibrium. While modest, this sustained growth underscores a quiet confidence returning, despite the mixed economic signals.

“As ever, there are competing forces at play. The recent interest rate cut by the Bank of England to 4.25%, coupled with falling mortgage rates and more flexible lending criteria, is undoubtedly supporting buyer confidence. Sub-4% mortgage deals are now a reality for many with strong loan-to-value positions, and with swap rates improving, we expect this to gradually open the door to more buyers. These shifts are easing affordability pressures and encouraging market participation.

“However, we remain mindful of the broader backdrop. Global uncertainty and a still-subdued economic outlook will likely prevent runaway growth. For now, we anticipate a steady, measured trajectory for house prices in the months ahead rather than a sharp upward curve.

“Stock levels remain at a 10-year high for this time of year, meaning that while seller sentiment appears strong, pricing realism is key. With more choice available to buyers, correctly pricing from the outset is essential to attract attention and secure sales.

“After the surge in transactions earlier this year, driven by the Stamp Duty deadline, April’s drop in sales was expected. It’s likely we’ll see a short period of adjustment, but agent sentiment, as captured in the latest RICS data, suggests optimism for the second half of the year. Demand is proving resilient and the average time to sell is falling, both signs of a market moving in the right direction.”