UK house prices hit a new record high in May as a lack of available properties coming onto the market continued to drive up the cost of homes, latest research by Rightmove finds.
The average price of property rose to £367,501 this month - an increase of 2.1% (+£7,400). It is the highest rise seen at this time of year since May 2014. The increase marks a national jump of £55,551 in asking prices in the two years since the housing market shut due to the pandemic.
Rightmove said the "frenzied" market activity had led to a two-year price growth in cash terms never before witnessed in more than 20 years of tracking prices.
"The imbalance between supply and demand is supporting rising prices," said Tim Bannister, Rightmove's director of property science. "Though demand is softening from the heady levels we saw this time last year, the number of buyers enquiring is still significantly higher than during the last ‘normal’ market of 2019, while the number of homes for them to choose from remains more constrained."
The property market appears to be bucking the economic downturn, which has already started to put pressure on UK households. Inflation rose to 9% in the year to April, up from an already high 7% in March, according to the Office for National Statistics (ONS). It was the fastest measured rate since records began in 1989, and the ONS estimates it was the highest since 1982.
The number of buyers contacting estate agents is 14% down on the stamp-duty-fuelled market of this time last year, Rightmove said, but is up by 31% on the more comparable market of 2019.
The number of properties available to buy is 55% down on the levels seen in 2019, meaning that supply and demand look likely to remain out of kilter for at least the rest of the year. Meanwhile, the number of sales agreed is up by 12% in the year to date compared to 2019 even with restricted choice.
Rightmove said it expected the effects of the increased cost of living and rising interest rates to filter through to the market later in the year.
"A combination of more supply of homes and people weighing up what they can afford will help to moderate the market," the property website added.
