UK house prices rose 2.7% in the 12 months to May, taking the average to £271,000, according to the latest figures from the Office for National Statistics.
The regional picture shows a widening divide, with the North East recording the fastest growth at 5.9%, while London was the weakest performer, with prices down 3.7% over the year.
The rental market followed a similar pattern. Average monthly rents increased 3.3% in the 12 months to June to £1,388 – £44 a month more than a year earlier.
The North East again topped the table with rents up 6.3%, while London saw the slowest growth at 2.2%, suggesting the capital’s long stretch of outperformance continues to unwind as affordability pressures bite.
Although house prices are generally ticking higher, analysts warn that the UK could face softness going into the second half of the year.
“We can expect more weakness to settle into the figures across the country in the coming months,” said Sarah Coles, head of personal finance at AJ Bell.
“This data measures house prices at completion, so tends to cover sales agreed three or four months earlier. It means the summer figures could be a tough read, reflecting loss of confidence and stretched affordability after the start of the Iran war.
“There was an outbreak of optimism with the Iran peace deal, which cut the oil price, reduced inflation fears, and meant mortgage rates got decidedly cheaper. However, the fragility of that deal has dimmed this optimism, and recent mortgage rate rises could send many buyers back into a wait-and-see pattern.”