After the stamp duty rush, the housing market has entered into a more subdued phase, but the underlying trends remain positive. And, despite predictions of a far sharper slowdown after buyers brought forward purchases to beat the April tax deadline, the market is showing remarkable resilience.

The latest data from the major indices clearly show modest but steady growth. Although Rightmove’s asking prices hit another new record in May, rising by 0.6% to £379,517, the increase was notably below the usual spring boost. Perhaps more significantly, the rise comes despite a decade-high number of properties becoming available for sale, suggesting the expanded choice is actually stimulating rather than dampening activity.

Halifax’s data shows a small monthly dip of 0.4% in May to £296,648, but this follows positive April figures and annual growth remains healthy at 2.5%. Nationwide bucked the trend with a 0.5% monthly rise. Annual growth, however, held steady at 3.5%.

The regional picture shows the continuation of the north-south divide. Scotland tops the growth with asking prices up 2.5% annually and monthly growth of 0.5%, followed by the North East at 2.8% annually with monthly growth of 0.7%. London, on the other hand, has annual growth of just 0.7% with monthly growth of 0.4%, reflecting the ongoing affordability constraints in the capital.

Amanda Bryden, Head of Mortgages, Halifax, says: “These small monthly movements point to a housing market that has remained largely stable, with average prices down by just 0.2% since the start of the year. The market appears to have absorbed the temporary surge in activity over spring.”

The outlook for mortgage rates continues to be a key driver of market sentiment. While the Bank of England cut the base rate to 4.25% earlier this year, expectations for further reductions have been tempered by persistent inflation pressures. Money markets are now pricing in a slower pace of cuts than previously anticipated, which could keep mortgage rates elevated for longer than many had hoped (see finance section).

And Tim Bannister, Rightmove’s Director of Property Science, says: “The ten-year high choice of homes for sale means that sellers need to be aware of the level of competition they’re facing. In the current market, buyers may well have several similar homes to choose from in their area.”

Moving forward, the key factors will be the pace of any further base rate cuts and how quickly the market adjusts to the new stamp duty thresholds.

HOUSE PRICES AND STATISTICS

The slight variations between the indices are mostly the result of their different methodologies, but all show continued annual growth ranging from +2.5% to +6.4%.

Nationwide: May Avge. price £273,427. Monthly change +0.5%%. Annual change +3.5%
Halifax: May: Avge. price £296,648. Monthly change -0.4%. Annual change +2.5%
Land Registry: Mar: Avge. price £295,654. Monthly change +1.3%. Annual change +6.7%
Zoopla: Apr: Avg. price £268,200. Annual change +1.6%.
Rightmove: May: Avge. price £379,517. Monthly change +0.6% (asking prices)

BUY-TO-LET

The rental market has cooled considerably, according to Zoopla’s latest report, with rental growth at a four-year low. Average rents for new lets are now 2.8% higher over the last year, down from 6.4% a year ago – the lowest rate of inflation since July 2021. The average monthly rent now stands at £1,287.

This slowdown is evident across most regions. Yorkshire and the Humber has seen rental growth ease to 1.1%, down from 6.4% in 2024. Key university cities are leading this trend, with Leeds recording a 1.5% fall in rents. The North East has also seen growth slow to 5.2%, down from 9.4% last year.

London is posting modest falls in some inner areas, with overall growth at 1.5% and average rents of £2,175.

Richard Donnell, Executive Director of Research at Zoopla, says: “Rents rising at their lowest level for four years will be welcome news for renters across the country. The average annual cost of renting is over £2,500 a year higher than three years ago, the same as the increase in average mortgage repayments for homeowners.”

The cooling is the result of weaker rental demand, which is 16% lower than it was last year, though still 60% above pre-pandemic levels. Lower migration into the UK for work and study is a key factor, with a 50% decline in long-term net migration in 2024. Improved mortgage access for first-time buyers is also reducing demand at the upper end of the rental market.

Despite this, underlying supply shortages persist. While rental stock is 17% higher than last year, it remains 20% below pre-pandemic levels. It means competition remains intense, particularly for lower to middle-income renters who are struggling to get on the housing ladder.

Zoopla is predicting UK rents will increase by 3-4% over the remainder of 2025.