May House Price Index

Housing market confident but clear difference in price growth between north and south

 

The average price of newly-listed homes for sale rises by 1.2% (+£4,333) in May to £378,304. This is a greater rise than the ten-year May average of 1.0%. Housing market activity overall remains surprisingly confident despite uncertainty around global events and rising costs for many households.

 

However, there is a clear difference in price growth between the north and south of the UK. The national average shows an annual price fall of 0.3%, but there is a lot more going on at the regional level. House prices in the more affordable North East (+2.7%) and North West (+2.6%) are continuing to grow, while London (-2.4%) and the South East (-1.6%) are seeing price falls.

 

The number of homes for sale is at its highest level for this time of year since 2015, and almost a third of listings of existing homes for sale are seeing prices reduced. In light of this, new sellers need to price carefully at the beginning of the process to avoid longer selling times. Homes that didn’t need a price reduction sold in just 36 days, compared with 127 days for those that needed a reduction.

 

Market activity holding up well, including for first-time buyers

 

Despite ongoing pressures on the cost of living and higher mortgage rates in recent months, sales agreed were down by just 4% compared with this time last year, and were 2% higher than the same period in 2024. This suggests that many movers are going ahead with their plans, where affordability allows, even in a period of uncertainty around global events.

 

The first-time buyer market told a similar story, with sales down 4% compared with the stronger 2025 market and only 1% lower than 2024. This suggests that first-time buyers have not yet been heavily impacted by recent mortgage rate rises, despite affordability being an important factor for this group.

 

Affordability is being helped by lower pricing by new sellers. Typical first-time buyer homes saw the smallest average monthly price increase (+0.3%) and remained 0.7% lower than at this time last year.

 

What are mortgage rates doing?

 

Mortgage affordability has improved slightly this month, with Rightmove’s daily mortgage tracker showing that the average two-year fixed rate has fallen to 5.18%, from 5.42% at this time last month*.

 

Matt Smith, Rightmove’s mortgage expert comments: “While mortgage rates remain higher than many buyers would like, the picture on affordability has become a little more supportive this month. Small rate falls can make a meaningful difference to monthly budgets, and when combined with greater flexibility in lending following last year’s review of affordability rules, many buyers are still able to make the numbers work.”

 

The numbers at a glance