Average UK house prices increased by 2.7%, to £271,000, in the 12 months to May, down from 3.9% in the 12 months to April, the latest UK House Price Index from the Land Registry shows.
Slowing of the annual inflation rate was caused by a base effect from a small monthly price rise in May 2026 and a large monthly rise in May 2025, following the April 2025 stamp duty in England and Northern Ireland.
Average house prices increased by 2.3% in England, 4.2% in Wales, and 4.4% in Scotland.
The North East was the English region with the highest house price inflation, at 5.9%, although down from 9.7% in the 12 months to April.
Annual house price inflation was lowest in London. Prices fell by 3.7% in the 12 months to May, down from an annual fall of 2.3% in the 12 months to April. This is the ninth consecutive month where there has been an annual fall in house prices in London.
Chris Storey, chief commercial officer at Atom Bank, commented: “House prices are continuing to feel the effects of events outside of the market itself. The conflict in Iran, and the resulting impact on interest rate forecasts, has understandably led some potential buyers to pause their plans, and that is feeding through into the modest growth we are seeing currently. With the ceasefire failing, that uncertainty is likely to carry on.
“Despite these challenges, recent analysis from the Royal Institution of Chartered Surveyors (RICS) suggests the market is stabilising, with some improvements seen on new buyer enquiries and agreed sales. Mortgages are becoming far more competitive too, with Moneyfacts reporting the biggest fall in average rates in two years between June and July.
“The new Prime Minister, Andy Burnham has promised a dramatic improvement in the number of council houses built across the country, but he will also need to oversee an improvement in the number of private developments if we are to ensure home ownership becomes more affordable and achievable.”
Tomer Aboody, founding director of MT Finance, said: “The increase in average property values over the past 12 months is all the more surprising given tough market conditions but reflects softer values a year ago following the end of the stamp duty holiday. The reality now is that buyers are more cautious and not prepared to pay over-the-odds, particularly when they have so much choice available to them.
“The high cost of living means lack of affordability is the overriding concern for many, particularly first-time buyers and those purchasing in more expensive parts of the country such as London and the southeast. Lack of encouragement from the government has fuelled hesitation in both buyers and sellers, with many pausing and taking a ‘wait and see’ approach.
"With further reductions in base rate on hold for the foreseeable future, and higher stamp duty due to the lack of any concessions from the government, there is little incentive to make a move unless you really have to. With mortgage rates edging upwards again, needs-based buyers who have to move are taking on higher loan-to-values in order to be able to purchase."
Ben Nichols, CEO of RAW Capital Partners, added: “This annual house price growth straddles two markedly different six-month periods. The second half of 2025 was defined by a sense of relative calm and stability, with inflation largely under control and interest rates steadily falling. In the past six months, by contrast, we have witnessed significant geopolitical and economic uncertainty, which has impacted swap rates and, in turn, the lending market. Throughout it all, the housing market has evidently remained resilient, and though recent volatility has undoubtedly impacted buyer confidence, we are still seeing notable interest in UK residential property from both domestic and overseas investors.
“As ever, the devil is in the detail, and the regional differences within today's ONS data are noteworthy. For instance, average property prices in London have fallen by 3.7% since May 2025, while those in the North East have jumped 5.9% in that time. In our work with brokers and borrowers, it's important that lenders recognise these market trends. Ultimately, it underlines why a flexible approach to assessing mortgage applications is so important - as "uncertainty" remains a watchword across the property industry, pragmatism is a vital quality in providing much-needed certainty to those seeking mortgages for themselves or their clients.”
