House prices increased month-on-month by 0.5% in May, after dropping by 0.6% in April, Nationwide has revealed.

The building society’s house price index showed that the average house price in the UK stood at £273,427 in May, increasing by 3.5% year-on-year.

Nationwide stated that official data has shown there was a "significant jump" in residential property transactions in March, with many bringing house purchases forward stamp duty costs.

However, chief economist at Nationwide, Robert Gardner, said the housing sector appears to be holding strong despite these challenges.

He stated: "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."

Nationwide also revealed that between December 2019 and December 2024, house prices increased in predominately rural areas by 23%, compared to 18% in areas that are largely urban.

The building society said the pandemic had a "significant impact" on housing demand during 2021 and 2022 with a shift in preferences towards more rural areas, particularly among older groups.

Looking ahead, personal finance analyst at Bestinvest, Alice Haine, said that following challenges, the market could be set to improve, although some uncertainty remains.

She concluded: "While the Bank of England cut interest rates in May, there is less certainty they will follow up with a fifth rate cut in June.

"Uncertainty is becoming the new normal and for many first-time buyers or home movers looking to refinance their existing mortgage soon, it may be better to push ahead with a purchase rather than wait for the ideal borrowing conditions.

"Plus, the traditional surge in listings at this time of year is a positive buyers can take advantage of, as a wider stock of homes to choose from raises the potential for heavier negotiation on price."

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