While global and domestic events continue to create uncertainty, the UK property market continues to prove resilient in most areas and property sectors.
The UK economy isn’t in top form, but it’s far from crisis. Inflation remains stubbornly above 3%, exceeding the Bank of England’s 2% target, driven partly by rising wages. Encouragingly, this wage growth – robust in recent years – appears to be easing, which could help slow inflation later in the year.
What does this mean for interest rates?
The Bank of England’s Monetary Policy Committee (MPC) faces a tough balancing act: inflation and wage growth are still too high to cut rates aggressively, but the overall economic and property performance is soft enough to require a cut.
According to Capital Economics, which I have found to be one of the best forecasters of interest rates, a base rate cut to 4% could happen as early as August 2025, with others suggesting a reduction may come in the autumn. Several forecasts suggest we could see rates fall below 4% by year-end, offering a potential boost for property and mortgage activity.
The only market this may not boost is the prime property market, especially in London, which is being hit by the high levels of Stamp Duty Land Tax and the loss of Non-Doms.
As is often the case in the property market, whatever is reported on prices, the reality is that this year we will see some prices rising, some falling, and some staying the same. The good news is that enough properties are being bought and sold to keep agents and the rest of the home moving services in business.
Property price and market indices headlines
Rightmove
Prices reach new record despite more subdued late Spring market
“New seller asking prices rise by 0.6% (+£2,335) this month to a new record of £379,517.”
Sales market momentum remains relatively soft, although sentiment on the near-term outlook turns less downbeat
“House prices largely flat at the headline level.”
Sales Stock Soars and Prices Crumble in London and the South East
“Annualised home price growth across England and Wales continues to be well below the level of inflation at just 1.4% overall.”
Annual house price growth edged higher in May
“Annual rate of house price growth increased marginally in May to 3.5%, compared to 3.4% in April.”
UK house prices dip slightly in May, but market remains steady
“House prices fell by -0.4% in May vs rise of +0.3% in April.”
Market to strengthen over the medium- to long-term
“Monthly price falls for England & Wales evaporate as London prices stabilise.”
The number of sales agreed in May is the highest it’s been for 4 years and up 6% on last year
“The rise comes as the market rebounds after the Easter lull and initial reaction to stamp duty relief ending.”
So far this year, the property market has already seen huge numbers of completions by the end of March because of the end of the temporary Stamp Duty Land Tax reduction. As a result, April was expected to be a bit subdued. Although we saw lower levels of buyer activity, sellers were still keen to put their homes up for sale, and as a result, transactions were still up year over year.
May has continued with similar trends even though interest rates fell from 4.5% to 4.25%. However, completions have gained momentum, and Zoopla has reported that sales agreed for May are 6% higher than the previous year.
The other good stats news is that according to Rightmove and Zoopla, the number of properties coming to market is up 14% and 13% yearly, respectively. This provides hope for a good market over the summer because the more properties that are on the market, the more stock there is to entice previously reluctant buyers to view and make offers on properties, so this bodes well for the summer months.
Ssummary of the insights from this month’s indices
- The traditionally strong late Spring market is more subdued following a busy first quarter of the year. Along with the smaller than-usual price increase, there has been a dip in new buyer demand following April’s stamp duty increase.
- After a busier than usual March, new buyer demand slowed in April to 4% below the same month in 2024. However, demand in the year to date is still 3% ahead of last year, and there are early signs of a bounce-back in May.
- Despite April’s lull in new buyer demand the number of sales being agreed in the last month is 5% higher than at this time last year, indicating that spoiled-for-choice buyers are still being tempted by the right property at the right price.
- The number of new properties coming onto the market for sale is now 14% ahead of this time last year.
- As new seller activity outpaces new buyer demand, some caution on price expectations is needed to achieve a sale • The latest Bank Rate cut could provide a boost to buyer affordability and activity later in the year. Rightmove’s weekly mortgage tracker shows that the lowest available two-year fixed mortgage rate is now 3.72%, down from 4.75% last year.
- Asking prices rose in every English region (except Greater London and the South East), Scotland and Wales during April, making the national average rise by a further 0.4%. Surplus stock in London and the South East is creating strong downward price pressure.
- Sales market momentum shows a further increase over and above that of May 2024. High activity has upped the property turnover rate to be above any of the previous ten years of May readings. However, even this heightened throughput is not enough to prevent a serious build-up of unsold stock.
- Typical Time on Market is now five days higher than in May last year and rising.
- House prices were up 0.5% month on month.
- House prices in predominantly rural areas have risen by 23% over the last five years, compared to 18% in more urban areas.
- Overall house prices have remained stable so far this year.
- Northern Ireland continues to lead annual price growth in the UK.
- Prices in some regions temporarily soften as market adjusts to higher stamp duty costs.
- Market set to improve over the medium/long term with easing of affordability rules and lower interest rates.
- Annual price changes remain modest, with values down 1.4% year-on-year.
- House price growth is stable with a 1.6% rise compared to a year ago.
- More sellers are listing their homes for sale, with a 13% rise on last year.