UK house prices edged higher in May, with annual growth rising to 3.5% from 3.4% in April, according to the latest figures from Nationwide that show the market remained stronger than expected following the end of the stamp duty holiday.
On a monthly basis, prices were up 0.5% after seasonal adjustment, reversing the 0.6% fall reported the previous month.
The average UK house price now stands at £273,427, up from £270,752 in April.
Robert Gardner, Nationwide’s chief economist, said that while activity levels spiked in March as buyers brought forward transactions to avoid stamp duty costs returning after the holiday introduced by the previous government.
The movement in prices and mortgage approvals data suggests that market activity has held up well.
"Despite wider economic uncertainties in the global economy, underlying conditions for potential home buyers in the UK remain supportive," he 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 also highlighted the ongoing strength of rural housing markets.
House prices in more rural areas increased 23% between December 2019 and December 2024, 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," says Gardner.
Nationwide’s recent survey data shows that while most people move within the same type of location, older buyers are more likely to relocate from cities to the countryside.