Residential property prices increased by an average of 2.2% to £285,000 in the year to May, the latest Office of National Statistics (ONS) data reveals.

Prices were also up on a monthly basis by 1.3% since April.

Across the nation, average house prices in England rose 2.2% to £302,000, lifted 2.4% in Wales to £216,000 and jumped 2.5% in Scotland to £191,000 in May.

In the first three months of the year, average house prices in Northern Ireland rose 4% to £178,000.

The greatest property price gains were recorded in London, up 3.9% month-on-month, while the South East saw the smallest monthly price growth, with a rise of 0.3%

Yorkshire and the Humber experienced the greatest annual price rise, up by 3.9%, however, London saw the lowest annual price growth, with a rise of 0.2%.

Industry reaction:

Nathan Emerson, CEO of Propertymark, commented: “It is fantastic to see that the lead up to the general election did not disrupt the housing sector greatly, and despite many challenges, the market still delivered growth. Propertymark remains keen to learn more on how the supply of 1.5m new homes across this parliamentary term will be delivered, along with what support may be offered to first time buyers. Home ownership must always remain a realistic and workable proposition for those who choose it. Across the coming weeks, we hope to see a dip in interest rates too, and for this to translate into lenders offering a raft of targeted mortgage deals.”

Iain McKenzie, CEO of The Guild of Property Professionals, said: “Another solid month of growth in house prices is great news for sellers during the summer months, when footfall at estate agents is at its highest.

“Modest levels of annual growth in London and the South East are not surprising, considering prices have been overinflated in the region for many years.

“The latest transactions data shows a fifth consecutive increase in sales, meaning that more people are getting on the property ladder. This can only be good news for buyers and sellers alike, with sellers in particular not being forced to reduce their asking price so significantly.

“The political upheaval has settled, and the new government is getting its feet under the table. We have already seen a renewed commitment to house building which will go a long way towards filling the gaps in areas with a shortage of available homes.

“The key to allowing first-time buyers to make the most of new homes is ensuring that they are affordable and competitively priced for the area.

“The next barrier that needs to be tackled is the availability of mortgage deals and how easy it is for households to make their repayments.

“With inflation coming down within target levels and economists hopeful for inflation on core services to fall too, we should see the Bank of England lower interest rates in the coming months. This should be the shot in the arm that lenders need to ramp up better fixed-rate mortgage offers.”

Jonathan Hopper, CEO of Garrington Property Finders, commented: “Today’s data confirms the upward momentum is a bounce not a blip.

“Not only is the national pace of price growth accelerating, but average prices are once again rising in every single region of the UK.

“The turnaround has been particularly strong in London. As recently as April, average prices were still falling sharply in the capital, but today’s data confirms they crept back into growth during the 12 months to May.

“Yet huge regional disparities remain, with the least affordable areas seeing very modest price rises as high interest rates force buyers to be intensely price sensitive and picky. Even in traditionally prime areas, only the very best properties are achieving full asking prices.

“Nevertheless the progress is welcome and alongside the steady rise in national prices, transactions are stabilising nicely. The number of homes changing hands in May was up nearly a fifth compared to the same month last year, and up 2.4% compared to April.

“The surge in the number of properties put on the market during the first half of the year means that would-be buyers who put their househunting on pause during the uncertainty of the election are returning to a market with plenty of homes to choose from.

“While the jury is still out on whether today’s consumer inflation figure will be enough to persuade the Bank of England to start cutting interest rates in a fortnight’s time, some mortgage lenders are already starting to trim their rates in anticipation.

“The combination of more affordable borrowing and improving sentiment should be enough to keep the momentum going in coming months.”

Paul Glynn, CEO at Air, noted: “After three consecutive months of house price growth, there is no doubt that the UK property market has settled into a stable holding pattern. The turbulence of 2023 is finally in the rearview mirror and the market temperature is heating up. With a new government in office and a potential interest rate cut on the horizon, scores of buyers may feel empowered to brave higher mortgage rates to secure their dream home.

“Nevertheless, the unavoidable truth is those buyers who do step onto the ladder will likely carry their mortgage repayments into retirement. The later-life market is splitting into two categories: the traditional equity release market, and the new generation who may lean on specialist lifetime mortgage products to reduce their interest burden in their autumn years. In the future, the homeowning journey may last a lifetime, so advisers must be on hand to ensure buyers can benefit from a smooth continuum of lending.

Mobeen Akram, new homes director, Mortgage Advice Bureau, stated: “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.”

Emma Cox, MD of real estate at Shawbrook, added: “Despite a dip in house buying activity, house prices returned to growth in May. This, coupled with the likelihood of interest rate cuts this year and a recent spate of lenders lowering mortgage rates should provide optimism for the remainder of the year.

“Professional landlords will be hoping for some post-election pricing consistency, and will also be keeping an eye out for any announcements from the new Government which may have an impact on the buy-to-let market. For the time being, landlords will be keeping a watchful eye on prices and rates to explore any opportunities to expand their portfolios.”