"Eyes will now turn to the Bank of England, and when it will look to start reducing bank base rate, as reduced rates will also serve to boost buyer confidence."
- Richard Harrison, head of mortgages at Atom Bank
Average UK house price annual inflation was 2.2% in the 12 months to May 2024, up from an increase of 1.3% in April, according to the latest UK House Price Index from the Land Registry.
The average UK house price was £285,000 in May, £6,000 higher than 12 months ago.
Over the past year, average house prices have increased by 2.2% in England, 2.4% in Wales, 2.5% in Scotland, and 4.0% in Northern Ireland.
Of the English regions, annual house price inflation was highest in the Yorkshire and the Humber, where prices increased by 3.9% in the 12 months to May. London was the English region with the lowest annual inflation, where prices increased by 0.2% over the year.
Average prices increased by 1.2% between April and May 2024, up from an increase of 0.2% during the same period 12 months ago.
Director of Benham and Reeves, Marc von Grundherr, commented: “Despite the brief period of political uncertainty spurred by a snap election, we've seen little deviation from both buyers and sellers with respect to their property transaction plans and this has ensured that positive house price growth has been maintained.
"While higher mortgage rates continue to restrict buyer purchasing power at present, it’s only a matter of time before interest rates are cut. When this does happen, we expect it to act as a significant shot in the arm to the UK property market and the slow but steady performance of recent months should giveaway to an altogether more active market landscape and a stronger rate of house price appreciation.”
Mobeen Akram, New Homes director at Mortgage Advice Bureau, said: “This month’s HPI hammers home the fact we’re settling into a more positive place with the current market, and this has a lot to do with consumer sentiment. Lenders have the appetite to lend, particularly given recent mortgage rates drops from major banks.
“We’ve also seen an increase in the number of customers wanting to buy houses, and this is due to customers finding the market more affordable, with fairly stable rates across the board. Inflation sits at 2%, indicating that the market is still holding fast.
“We’ve seen a small monthly change of -1.2% in average new build prices, while the change for existing properties has held. With more choice and opportunity for customers and changes on the horizon from Labour to support the creation of new homes, we can remain cautiously optimistic about the year ahead and hope to see a much-needed boost for the new build market.”
Richard Harrison, head of mortgages at Atom Bank, added: “The fact that the ONS has now reported three months of straight house price increases is a good indication of the growing confidence in the market. This data predates the calling of the general election, however, which may have had a temporary effect on buyer demand and with it house price movements.
“The general election inevitably brought some uncertainty to the market, but the fact that we had such a definitive result means that some sellers and buyers will feel more comfortable pushing on with plans. There may also be some encouragement from the new government’s proposed Freedom to Buy permanent mortgage guarantee scheme, which is aimed at providing more options for buyers with small deposits. We have long been a champion of such buyers, focusing on delivering competitive rates for those with smaller deposits, but more choice would be welcome.
“Eyes will now turn to the Bank of England, and when it will look to start reducing bank base rate, as reduced rates will also serve to boost buyer confidence. With inflation continuing to move in the right direction, it’s simply a question of when, not if."
