UK House Prices May 2026 — Are They Going Up or Down?

Where Are UK House Prices Right Now?

UK house prices have shown mixed signals in the first part of 2026. According to the latest data from Halifax and Nationwide, annual price growth has moderated significantly from the post-pandemic boom, with some months showing small monthly declines.

As of May 2026, average UK house prices are running around 1-3% lower than this time last year, depending on the dataset referenced. This represents a meaningful shift from the double-digit growth seen during 2021-2022, but not a crash.

The market is characterised by regional divergence and a relative lack of transaction volume. Many would-be buyers are being priced out by the combination of higher mortgage rates and static incomes, creating a standoff between buyer expectations and seller aspirations.

London vs the Rest of the UK

The divergence between London and the rest of the UK has widened. London house prices have been under particular pressure due to the high absolute cost of property in the capital, which amplifies the impact of higher mortgage rates.

In contrast, many parts of the north of England, the Midlands, and parts of Wales and Scotland have seen more resilient prices or even modest growth. These regions typically have lower average property values, meaning mortgage payments are more manageable relative to local incomes.

For investors, this divergence creates interesting dynamics. London property may offer better value relative to historical norms, but carries higher carrying costs. Northern properties may offer better rental yields but lower capital growth potential.

What Falling Prices Mean for Affordability

Lower house prices should, in theory, improve affordability. A 5% reduction on a £300,000 property reduces the required mortgage by £15,000. Combined with a larger deposit, this could bring first-time buyers closer to their goal.

However, affordability is not just about house prices—it's about mortgage payments relative to income. With rates where they are, monthly payments on a given mortgage amount are substantially higher than they were a few years ago. This means the affordability benefit of lower prices is partially offset by higher borrowing costs.

The real test of affordability improvement would be simultaneous falls in house prices and mortgage rates. Until that happens, many buyers will continue to face stretched affordability.

Impact on Deposit Requirements

A smaller house price reduces the absolute deposit amount needed. For example, if you are buying with a 10% deposit, a 5% price fall on a £300,000 property saves you £1,500 in cash required.

However, lenders' affordability assessments consider your income relative to the loan amount, not just the deposit. If your income has not increased in line with mortgage rate rises, you may still fail affordability checks even with a larger deposit.

For first-time buyers, Help to Buy ISAs and Lifetime ISAs remain valuable tools for building a deposit, even in a challenging market. Government support schemes may also be worth exploring.

The First-Time Buyer Perspective

First-time buyers face a particular challenge in the current market. On one hand, some sellers are more negotiable than they were during the pandemic frenzy. On the other hand, mortgage costs are higher, and saving a deposit while paying rent is increasingly difficult.

Despite these challenges, there are reasons for optimism. Some developers and sellers are offering incentives to attract buyers—contributions to legal fees, upgraded fittings, or furniture packages. These can add meaningful value without requiring larger mortgages.

The key for first-time buyers is to get professional advice early. A mortgage broker can tell you exactly how much you could borrow, what your monthly payments would be, and whether any government schemes could help you onto the ladder.

Check Your Buying Power

Use our UK mortgage calculator to see how much you could borrow based on your income and deposit. Enter your details to get an instant estimate of your maximum mortgage and monthly payments.

• Open UK Mortgage Calculator