The building society said that the annual rate of house price growth increased marginally in May to 3.5%, compared to 3.4% in April.
Robert Gardner, Nationwide’s chief economist, noted: “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.”
Alice Haine, personal finance analyst at Bestinvest, added: “Borrowing conditions have improved in recent months, something that may be helping to prop up the market.
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“Mortgage rates have eased on the back of four interest rate cuts from the Bank of England since last August though there has been some volatility in the recent weeks amid shifting interest rate expectations.
“For many borrowers, home loan rates will be in a far better place than they were at the height of the mortgage crisis but not everyone can expect a better deal when they eventually refinance.
“For almost half a million homeowners set to remortgage this year when they roll off their cheap, five-year, fixed-rate deals secured when interest rates were at rock bottom, it will be time to adjust their household budget to make space for an almost inevitable jump in repayment costs.”
Countryside house prices outpace urban properties
Nationwide also found that average house price growth in predominantly rural locations has continued to outpace more urban areas. Between December 2019 and December 2024, house prices in predominantly rural areas increased by 23%, compared with 18% in areas that are largely urban.
Gardner noted: “The pandemic had a significant impact on housing demand during 2021 and 2022, with a shift in preferences towards more rural areas, particularly amongst older age groups. Whilst these effects have now faded, less urban areas have continued to hold the edge in terms of house price growth.”