In May 2025, UK house prices rose by 0.6% from the previous month, down from a 1.4% increase. Year-over-year, prices grew by 1.2%, a slight drop from the 1.3% rise seen last year. The average house price hit a new record, but monthly growth for May was the slowest in nine years. The number of homes for sale reached its highest level in a decade.

Demand And Supply

In April, buyer demand fell by 4% compared to April 2024. This decline came after a tax break for buying affordable homes and for first-time buyers ended on April 1. Current data shows that the housing market is slowing down. While prices rose by 0.6% in May, this is much less compared to April’s jump of 1.4%. The annual increase decreased to 1.2%. While this number isn’t alarming, it suggests that the earlier momentum in the market is fading. Although average house prices are at a new high, this May marked the weakest monthly growth in nearly a decade. Buyers appear to be more cautious, while sellers are eager to list their properties. With the highest number of homes for sale in ten years, supply has surged, but demand hasn’t kept pace. The shift in supply and demand was noticeable in April when buyer activity dropped by 4% compared to April 2024. This wasn’t a random fluctuation; it followed the end of government incentives that supported first-time and low-cost home buyers, causing a quick drop in enthusiasm.

Market Stability And Future Expectations

Looking ahead, we expect more stability in the market, but less speculation. Slower price increases and lower demand suggest a solid foundation rather than a dip. High levels of available properties give market participants more options. Savills indicates that the effects of higher borrowing costs are now apparent, with hopes for rate cuts influencing people’s outlook on future transactions. The head of research noted that although the Bank of England hasn’t yet reduced rates, the anticipation has boosted confidence. Halifax’s chief analyst mentioned that rising wages might help households manage current mortgage costs better. However, any significant changes will depend on real improvements in affordability, not just speculation. Additionally, data from the Office for National Statistics earlier this spring indicated price decreases in rental markets, especially in London. This could impact the sales market as landlords adjust their portfolios. Given the current conditions, we expect calm near-term trends. Price spreads aren’t widening dramatically, and activity related to housing price indices seems more influenced by scheduled data than sudden market changes. In practical terms, this provides clear boundaries instead of unpredictable volatility. The path ahead looks stable, but adjustments may arise as new surveys come in. It’s important to keep an eye on affordability metrics, income data, and the direction of rate policies. Create your live VT Markets account and start trading now.

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