May has been a good reminder that the housing market rarely moves in one direction.
Across the sector, the sheer volume of data available means that, at first glance, the market can appear contradictory: house prices rising according to some datasets and falling in others, rents cooling in some regions while continuing to climb in others, and affordability pressures remaining firmly in place despite mortgage rates beginning to ease.
Perhaps the most important takeaway from May, however, is that the market is proving more resilient than many expected.
This is particularly notable given that the narrative around housing has been dominated by uncertainty for some time, with inflation, rate expectations, affordability constraints, geopolitical volatility and regulatory change all creating reasons for both consumers and investors to pause decisions.
Market adaption
Looking at the sales market, Rightmove data showed that asking prices in the UK rose by 1.2% in May, while average two-year fixed mortgage rates fell from 5.42% to 5.18%. At the same time, sales agreed were only marginally below last year’s levels despite broader economic uncertainty.
This aligns with wider market data suggesting activity remains relatively robust. Homes are taking only slightly longer to sell than they were a year ago, and buyer enquiries have picked up following Easter as mortgage pricing begins to improve. Importantly, activity is continuing despite higher borrowing costs, rather than being driven by a marked improvement in mortgage pricing.
First-time buyers
The Zoopla House Price Index showed that there are fewer first-time buyers than there were a year ago, but those who are active are targeting homes around £10,000 more expensive than a year ago. This points to a shift in behaviour, with buyers focusing on higher-value properties where affordability allows, reinforcing the idea that demand has not disappeared but has become more selective.
At the same time, regional differences remain significant, with markets that rely more heavily on first-time buyer activity, particularly parts of London and the South East, continuing to face greater affordability pressures.
This selectivity is arguably one of the defining characteristics of today’s market.
The gap between asking prices and what buyers can realistically afford remains substantial. The Benham and Reeves Property Market Review of Q1 showed average mortgage approvals sitting considerably below average asking prices, while sold prices continue to track below seller expectations.
Rather than signalling weakness, this reflects a market where pricing discipline has become increasingly important.
Buyers today have more choice, more information and less willingness to stretch beyond comfortable affordability levels, while sellers who recognise this are more likely to complete transactions than those who do not.
The rental market
Rental growth has moderated from the peaks seen in recent years, with the Goodlord Rental Index showing modest monthly declines in April. However, affordability pressure remains intense.
Average rents continue to sit at historically high levels, and many tenants are still dedicating a significant proportion of income to housing costs, with a New Economics Forum report finding the lowest income renters are spending just under half their income (48.5%) on rent. At the same time, the underlying supply picture remains complex.
The Renters' Rights Act came into force in May, and early indications suggest that landlords are not leaving the sector but are instead adjusting their behaviour. Hamptons data showing that landlords accounted for 13.3% of all buyers in Great Britain from January to April challenges the assumption that regulation alone is forcing investors out of the market, and instead points towards the continued professionalisation of the sector.
Landlords are refinancing and restructuring portfolios as well as becoming increasingly strategic in how and where they deploy capital, with nearly four in ten planning to refinance within the next year and larger portfolio landlords appearing particularly active.
The introduction of the Renters’ Rights Act, alongside growing awareness around EPC requirements and ongoing tax pressures, means landlords are operating in a far more professional environment than even five years ago, although that does not remove the underlying challenges.
Affordability constraints, regulatory change and elevated costs remain very real considerations. At the same time, falling buy-to-let arrears provide another useful indication that adaptation is happening beneath the surface, as landlords, borrowers and brokers continue to adjust to a higher rate environment and more complex operating conditions.
The months ahead
Looking ahead, the key question for the second half of 2026 may be less about whether rates fall materially further and more about whether stability itself proves sufficient to support activity.
If May demonstrated anything, it is that activity has not left the market; rather, it has become more selective, more value-conscious and increasingly pragmatic in response to the conditions in front of it.
