UK house price growth in May exceeds forecasts

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House prices in the United Kingdom increased more than expected in May, with the support of low unemployment, the growth of strong wages and the mortgage rates.

The average cost of the property increased by 0.5 percent between April and May to 27,3427 pounds, most of them reflected a decrease of 0.6 percent in the previous month, according to the data issued by the lender on Monday.

Prices increased by an annual rate of 3.5 percent, up from 3.4 percent in the previous month. Both procedures are stronger than the increase of 0.1 percent a month and the annual expectations of 2.9 percent by economists in a Reuters poll.

“Although economic uncertainty in the global economy,” Robert Gardner, chief economist in NATORWIDE, said that “the basic conditions of potential homes in the UK are still supportive,” said Robert Gardner, the National Senior Economist in Nationwide.

“Unemployment is still low, profits rise at a health pace, home public budgets are strong and borrowing costs are likely to be slightly moderate if the bank rate is reduced in the coming quarters as we expect us, and most other analysts.”

The numbers refer to flexibility after the recession in April, when prices and transactions decreased with the return of stamp fees to pre -2022 levels.

From April 1, stamping sills returned to pre -2022 levels, which increased the tax cost of many real estate buyers and caused many families to complete the transactions before the changes.

The separate data published by the Bank of England showed on Monday, the purposeful mortgage approvals for buying homes decreased for the third month in a row, with a decrease between 3100 and 60500 in April. Reuters signed economists a smaller decrease to 63000.

The Bank of England also stated that the “actual” interest rate – the actual interest paid – on newly drawn real estate loans decreased slightly to 4.49 percent in April.

However, the premium real estate mortgage shares rate increased from 3.84 percent to 3.86 percent, indicating that the cumulative effect of increasing the interest rate since 2021 still strikes families.

Elliot Jordan-Dawak, an economist in the overall economy consulting consulting, said that removing the scenario of the worst tariff is thanks to the UK’s trade agreement with the United States means that the economic background has improved, which supports the demand for housing. He expected home prices to rise by 4.5 percent this year.

Wages in the United Kingdom grow faster than inflation for about two years, while mortgage rates have decreased.

The Bank of England reduced last month the fourth quarter prices for the fourth time since mid -year, as it reached 4.25 percent, and its lowest level since 2023. The markets expect that the central bank will reduce the cost of borrowing by another quarter of a quarter before the end of this year.

“With the distorted effects of March’s closing changes in the past,” the market returns to a more stable dynamic, as prices are determined again by the interaction of supply and demand, “said Gonathan Hopper, CEO of Garrington Property Finders Garrington.

Bank of England also showed that living families deposited for an additional 14 billion pounds in ISAS in April, which is the highest amount since the data collection began in 1999.

The central bank said that this was often compensated by withdrawing 11.5 billion pounds from the immediate bank accounts that pay interest, and 6.3 billion pounds from immediate access accounts that provide zero interest.

Individuals can carry up to 20,000 pounds annually in a mixture of cash and investment free of income and capital gains. But the ministers are considering reducing the cash amount after the calls of some city companies to transfer more money from savings into shares listed in London.