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Investing.com -- U.K. house prices rose more than expected in May, climbing 3.5% year-on-year, according to data released Monday by mortgage lender Nationwide.
On a monthly basis, prices increased by 0.5%, reversing most of April’s decline and marking the largest monthly gain since December.
The rise outpaced economists’ expectations. A Reuters poll had predicted a 0.1% monthly increase and a 2.9% annual gain.
Nationwide said the housing market showed signs of recovery after a dip in April, when property transactions dropped following a March surge driven by buyers rushing to beat the end of a temporary purchase tax break.
“Despite wider economic uncertainties in the global economy, underlying conditions for potential home buyers in the UK remain supportive,” said Robert Gardner, Nationwide’s chief economist.
“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.”
Nationwide noted in a recent special report that house price growth in predominantly rural areas has continued to outpace that of more urban locations. Between December 2019 and December 2024, prices in rural regions rose by 23%, compared to an 18% increase in largely urban areas.
The lender highlighted the impact of the pandemic on housing trends in 2021 and 2022, when demand shifted in favour of rural living, especially among older buyers. Although those pandemic-driven preferences have since eased, rural markets have maintained a slight lead in price performance.
Nationwide’s latest housing survey shows that most homeowners who moved in the past five years stayed within the same type of area, with 63% relocating within similar settings—particularly within large towns or cities.
About 9% moved from urban to rural areas, while 7% moved in the opposite direction.
The data also revealed clear age-related trends. Younger movers, especially those aged 25–34, were more likely to relocate to urban areas, whereas older homeowners, particularly those aged 55 and above, showed a stronger preference for rural living.