House prices inched up in the month of May by 0.5% following a dip in April, the latest data from Nationwide has revealed.
Over the last year house prices have increased by 3.5% which means the typical property in the UK is now £273,427.
It comes after a dip of 0.6% in April which came as a consequence of the stamp duty hikes.
Robert Gardner, Nationwide’s chief economist, said: “Official data confirmed that there was a significant jump in residential property transactions in March, with buyers bringing forward their purchases to avoid additional stamp duty costs.
“Owner occupier house purchase completions were around twice as high as usual and the highest since June 2021 (which was also impacted by stamp duty changes).
“Nevertheless, mortgage approvals data suggests that market activity appears to be holding up well following the end of the stamp duty holiday. Despite wider economic uncertainties in the global economy, underlying conditions for potential home buyers in the UK remain supportive.
“Unemployment remains low, earnings are rising at a healthy pace (even after accounting for inflation), household balance sheets are strong and borrowing costs are likely to moderate a little if Bank Rate is lowered further in the coming quarters as we, and most other analysts, expect.”
Experts say the latest house price data showed the market had re-balanced itself following the effects of the stamp duty changes.
Indeed, in the rush up to the end of the stamp duty holiday, property market activity increased abnormally and house prices were rising. But, this followed with a lull and a period of no growth as property transactions dropped off.
Karen Noye, mortgage expert at Quilter, said: “The figures suggest the housing market has adjusted well following the expiry of the temporary stamp duty threshold reduction, which had caused a rush to complete before the deadline. With that incentive now removed, there was a fear that buyer urgency would ease.
“However, mortgage rates continue to improve meaning more buyers are finding the confidence to enter the market.”
She added: “Looking ahead, if interest rates fall further, we may see further house price increases.
“But with ongoing economic uncertainty, many would-be movers may decide to hold off until the outlook becomes clearer. The market is still navigating a complex landscape.”
