Monthly price growth exceeds 10-year average as mortgage rates fall

Rightmove’s latest house price index reported a 1.2% growth in the average price of a property coming to the market last month, exceeding the typical 10-year May increase of 1%. With buyer choice at its highest level in a decade and mortgage rates dropping, market confidence appears resilient.

Key highlights from May 2026

• Average new seller prices rise by 1.2%, higher than the usual May increase in a decade.
• Prices in London are up by 0.8%, as agreed sales go up by 8% YoY.
• The two-year average fixed mortgage rate drops to 5.18% from 5.42%, as the Bank of England (BoE) holds the interest rate at 3.75%
• UK inflation rate eases to 2.8% from 3.3% in April.
• Average rent in London increases by 2%.

Despite slower price growth, London is still far ahead

Although average prices in the capital increased by only 0.8% in May, the value increase was over £5,000, compared to the average price growth of £4,333 across the UK. At £685,347, the average London home still costs more than 81% the UK average of £378,304. According to Zoopla, the average price of a first-time buyer home in London crossed £500,000 for the first time last month.

Sales are up despite a drop in buyer demand

Total sales agreed this May were 1% higher than last year, even though buyer demand dropped by 10%. London recorded the highest figures across all regions, with agreed sales up 8% YoY, which explains why house price inflation has stabilised after six consecutive months of modest corrections. However, price growth is expected to remain moderate as there are 13% more homes for sale than a year ago.

Correct pricing is crucial for quick sales

Almost a third of all homes listed for sale are seeing a price reduction, calling for sellers to price carefully for a successful sale. Homes that did not need any price reductions sold in just 36 days compared with the average of 127 days required for those properties that needed a price reduction. You can use our free, no-obligation valuation service to get an accurate estimate of your property for sale or to rent.

Mortgage affordability improves as the BoE holds the interest rate

Rightmove’s daily mortgage tracker reported a slight fall in the average two-year fixed rate from 5.42% in April to 5.18% in May. This drop came in as the Bank of England held its base rate at 3.75% in its last MPC meeting at the end of April.

Upcoming International property showcases, launches and private consultations

Our international offices wrapped up some successful showcases of The Orien at The Green Quarter and Sutton Garden Square in Malaysia, as well as King’s Road Park in Singapore. Next up, our India and Indonesia offices have an exciting event line-up planned for the coming months.

Our teams in Delhi and Mumbai will host an exclusive showcase of a brand-new development in Wimbledon, followed by events in Hyderabad and Bangalore to present Oval Village in Zone 1 and The Exchange Watford. Meanwhile, our team in Jakarta will host private consultations for investors looking to learn more about Berkeley Group’s London Collection.

Rental growth in London improves marginally

The Office for National Statistics (ONS) reported a growth of 3.5% in average monthly rents across the UK for the 12 months to April 2026. This was marginally higher than the 3.4% growth reported in the previous month. At 6.5%, regional rent inflation was highest in the North East, while London recorded the lowest growth figures of 2%. However, average rent in the capital rose by 1.7% from the previous month.

Despite sluggish market performance in recent months, average monthly rents in London at £2,290 are still more than 60% higher than the national average of £ 1,438 per month.

Helping landlords comply with the Renters’ Rights Act

The much-talked-about Renters’ Rights Act finally came into effect this May, bringing in a new wave of legislation that tightens the rules around tenancy agreements, no-fault evictions, bidding bans and frequent rent increases. As a trusted London-based estate and lettings agency with a legacy of over 65 years, we are helping landlords come up to speed with all the necessary information and support.

With seasoned lettings experts across all our 21 branches in the UK capital and several international offices, overseas investors and landlords can be assured of full compliance with all the rules.

If you are an investor looking to buy or rent a property in London, contact us to know more.