Insights 
VT 
In May 2025, UK house prices saw a monthly increase of 0.6%, compared to a previous rise of 1.4%. Year-on-year, prices grew by 1.2% following a 1.3% increase the year before.
The average house price reached a new record high, although it marked the slowest monthly growth for May in nine years. The market experienced the largest number of homes for sale in a decade.
Demand And Supply
Demand in April decreased by 4% compared to April 2024. This drop followed the end of a tax incentive for purchases of cheaper homes and for first-time buyers on 1 April.
The current data points to a cooling off in housing market momentum. While there was still progress—prices edging up by 0.6% during May—the pace has slowed sharply when compared with the previous month’s leap of 1.4%. On an annual basis, the increase slipped to 1.2%. That figure alone may not raise eyebrows, but it does suggest that whatever steam had been building in earlier phases of growth may now be fading.
Price-wise, we’re now looking at a new high for average homes. However, it’s worth flagging that this was the weakest May for monthly growth across nearly a decade. Buyers, it seems, are becoming more reserved. Sellers, on the other hand, have rushed in. With the number of homes available at its highest in ten years, supply has clearly ballooned—even if enthusiasm has not matched it on the demand side.
That swing in supply versus demand pushed through as early as April. Figures show a 4% drop in buyer activity compared to the same month in 2024. This isn’t mere fluctuation—it directly followed the withdrawal of government incentives. The benefit had been aimed at cheaper properties and those entering the market for the first time. With this support mechanism removed at the start of April, enthusiasm dulled almost immediately.
Market Stability And Future Expectations
For us, this suggests more stable—but less speculative—conditions ahead. We’re reading the slower price gains and the subdued demand as foundational rather than fading. Stocks of available property are still high, giving those active in the market more room to manoeuvre.
Savills’ position hints that the impact of costlier borrowing has largely filtered through, with expectations for rate cuts already shaping sentiment on upcoming deals. The head of research there noted that, although rate reductions by the Bank of England have not materialised yet, anticipation alone has created some confidence.
Halifax’s chief analyst added that stronger wage growth could allow households to absorb current mortgage costs slightly more comfortably. But any larger adjustments, according to her, would depend on actual improvement in affordability ratios rather than speculation.
Meanwhile, Office for National Statistics data from earlier this spring had already pointed to price dips in rental sectors, particularly in London. That can feed forward into the sales market as pressure on landlords adjusts their portfolio decisions.
Given what we’re seeing in liquidity and forward pricing, near-term expectations should tilt calmly. Spreads are not widening aggressively. Activity in the contracts that hinge on housing price indices appears more based in scheduled data than sentiment-driven spikes.
In practical terms, this sets us up with measurable boundaries rather than open-ended volatility. The track ahead doesn’t seem packed with shocks—but there is plenty of room for adjustment as newer surveys come in. A careful watch should remain on affordability indicators, earnings data, and the next moves on rate policy.
