House prices across the United Kingdom saw a modest rise of 2.7 percent in the 12 months to May 2026, marking a slowdown from the 3.9 percent increase recorded in April, according to data from the Office for National Statistics (ONS). The average price of a typical home in the UK was valued at £271,000 in May.

Regionally, price growth varied, with England reporting an average house price of £292,000, reflecting a 2.3 percent annual increase. Wales and Scotland experienced higher rates of growth at 4.2 percent and 4.4 percent respectively, with average prices of £215,000 and £196,000. Northern Ireland led with a 7.4 percent increase, reaching an average price of £198,000 in the first quarter of 2026.

However, London’s housing market continued to face challenges, with prices falling by 3.7 percent year-on-year to an average value of £545,000. This marked the ninth consecutive month of annual price declines in the capital. The slowdown was particularly pronounced in wealthier boroughs, with Westminster experiencing a 22.8 percent drop, Kensington and Chelsea down 10.7 percent, and Hammersmith and Camden falling by 7 percent and 6 percent respectively.

Market participants attributed London's downturn to several factors, including heightened uncertainty surrounding the approach of Andy Burnham, the new Prime Minister, toward property taxation and housing policy. This political uncertainty reportedly affected consumer confidence. Additionally, high property prices in London expose many buyers to substantial stamp duty charges, which contrasts with other regions where more first-time buyers benefit from stamp duty relief. About 80 percent of first-time buyers in London pay stamp duty, compared to only 10 percent in northern England.

Economic factors also played a role. The recent spike in mortgage interest rates, partly driven by geopolitical tensions such as the Iran conflict, disproportionately impacted London and the South East because buyers there typically require larger loans. Seasonal influences contributed as well, with experts suggesting that the summer heatwave and ongoing World Cup distracted potential buyers, resulting in a decline in buyer enquiries by 20 percent and a 7 percent drop in agreed sales compared to the previous year.

Some property experts expect market activity to recover later in the year, as the political landscape clarifies following Prime Minister Burnham’s first Budget. Despite the slowdown in pricing growth, industry representatives noted the housing market remains broadly resilient amid domestic and international pressures, though affordability challenges continue to affect many buyers, especially those entering the market for the first time.

In parallel to property prices, rental costs also increased modestly, with average monthly private rents rising 3.3 percent year-on-year to £1,388 in June 2026. Meanwhile, inflation showed signs of easing, with the Consumer Prices Index falling to 2.6 percent in June, the lowest since March 2025, which could influence future monetary policy decisions affecting the housing market.