A widening affordability gap is driving a growing north-south divide in UK house prices despite overall confidence in the housing market remaining stronger than expected, latest data from Rightmove reveals.
The property portal says the average asking price of a home coming to market rose by 1.2% in May, increasing by £4,333 to £378,304. The rise exceeded the typical 10-year May increase of 1.0%, although prices remain 0.3% lower than a year ago.
Rightmove says regional performance continues to diverge sharply, with more affordable northern regions outperforming southern markets. The North East recorded annual growth of 2.7%, closely followed by the North West at 2.6%, while London saw prices fall by 2.4% and the South East by 1.6%.
Buyer choice has also reached its highest level for this time of year since 2015, with 32% of existing listings reducing their asking price.
STEADY ACTIVITY
Rightmove’s data shows homes requiring a price reduction spend an average of 127 days on the market, compared with 36 days for homes priced correctly from launch.
Colleen Babcock (main picture, inset), property expert at Rightmove, says: “It’s normal to see asking prices pick up as we move through the spring selling season.
“What’s notable this month is that activity in the market is staying fairly steady, even with ongoing cost-of-living pressures and wider global uncertainty. The number of sales agreed is holding up well, consistent with trends we’ve seen in 2026 so far.
“However, this overall positive national monthly snapshot masks a north-south divide in year-on-year seller pricing-power. Prices are rising in the north, but all sellers should note that buyer choice is now at its highest level for this time of year since 2015.
“Getting the asking price right from the outset is therefore increasingly important, as homes priced too ambitiously are taking longer to sell.
“Our research shows that a home that’s been reduced takes on average 91 more days to sell than a home that hasn’t needed to be reduced. That’s where agents have a key role to play, working closely with sellers to set realistic prices from day one to help homes to attract immediate interest and sell more quickly.”
FIRST-TIME BUYERS
Despite higher mortgage rates and wider economic uncertainty, agreed sales are only 4% lower than the same period last year and remain 2% ahead of 2024 levels.
The first-time buyer sector has also remained resilient, with agreed sales down by 4% year-on-year, while prices for typical first-time buyer homes have fallen by 0.7%.
Babcock adds: “What’s encouraging is how resilient activity has remained, even among first-time buyers, despite the ongoing pressures of higher living costs and mortgage rates.
“The number of sales agreed in the first-time buyer sector is performing better than expected and is broadly tracking the wider market. Prices in the typical first-time-buyer sector are lower than a year ago, helping to support affordability.
“It’s a healthy dynamic that activity is continuing not because buyers are overstretching, but because prices are adjusting to levels that some would-be buyers can realistically afford.”
MEANINGFUL DIFFERENCE
Matt Smith, Rightmove’s mortgage expert, adds: “While mortgage rates remain higher than many buyers would like, the picture on affordability has become a little more supportive this month.
“Small rate falls can make a meaningful difference to monthly budgets, and when combined with greater flexibility in lending following last year’s review of affordability rules, many buyers are still able to make the numbers work.
“This helps to explain why activity has continued to hold up, particularly among first-time buyers.
“Price sensitivity is clearly feeding through into more restrained pricing at the entry level, but importantly this reflects affordability shaping the market rather than a drop-off in appetite. Where homes are priced realistically and budgets stack up, many buyers are still pressing ahead with their plans.”
INDUSTRY REACTION
Tom Bill, Head of UK Residential Research at Knight Frank, says: “The recent spike in borrowing costs will only have a gradual impact on demand, as more favourable mortgage offers that predate the Middle East conflict lapse over coming months.
“A Labour leadership contest this summer will add to the mood of uncertainty and keep downwards pressure on prices and, to a lesser extent, transaction numbers.
“Speculation over the content of this autumn’s Budget and the ideological stance of any new Chancellor could also keep a lid on activity, especially if bond markets are unsure about their policy agenda and borrowing costs stay high.”
PRICE-SENSITIVE TIMES
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “Uncertainty over indeterminate interest rate and inflation rises is prompting more protracted decision making and transactions, exacerbated by the significant amount of available property, especially flats.
“However, in our offices very few sales are falling through although buyers are negotiating and re-negotiating hard to ensure, as far as possible, that mortgage payments will be affordable today as well as tomorrow.
“Although the Rightmove survey always provides an interesting snapshot of market confidence, sellers’ asking prices are part of marketing so determine if genuine buyers are attracted in such price-sensitive times.”
AFFORDABILITY IS KEY
Tomer Aboody, director of specialist lender MT Finance, says: “Affordability is the main driving force in the housing market, as buyers, especially those purchasing for the first time, are able to get on the ladder outside the South East, particularly up north, where house prices are lower.
“Although mortgage rates are higher than this time last year, surprisingly the sales market hasn’t been impacted that much, as needs-based buyers still have to move and are taking advantage of higher leveraged deals in order to be able to buy.”
REALISTIC PRICING
Hollie Whittaker, Founder of Block & Brick, says: “We’re continuing to see our sales agreed figures rise month on month, which is really encouraging and reflects improving confidence from buyers across our local market.
“We’ve also seen a noticeable increase in viewing numbers recently, with plenty of buyers still actively looking and engaging with new properties coming to market.
“That said, realistic pricing remains absolutely vital. Buyers currently have a lot more choice available, so they’re taking their time and comparing properties carefully before making decisions.
“We’re finding that homes priced correctly from the outset are attracting strong interest and agreeing sales, whereas properties that have been sitting on the market for a while are often only seeing renewed activity once there’s been a price reduction.”
STRONGEST MONTH
Craig Webster, Managing Director at Tiger Estates & Management, says: “This month was actually our strongest month of the year so far in terms of agreed sales, which shows that there is still strong underlying activity within the market.
“That being said, the impact of mortgage rate increases will inevitably affect sentiment and affordability moving forward.
“While buyers are still active, the market is beginning to shift towards one where buyers have more choice, become more selective, and naturally have stronger negotiating power.
“As a result, realistic initial pricing strategy and proactive communication throughout the transaction process will become increasingly important for sellers and agents alike over the coming months.
“Overall, the market is still moving, but success is increasingly determined by sales strategy rather than sentiment alone.”
STRONG DEMAND
Benjamin Brain, Sales & Marketing Director at Hannells, said: “Since the beginning of 2026, we’ve seen the number of properties coming to market across Derby steadily increase month-on-month, suggesting that many buyers and sellers remain committed to moving despite the wider economic uncertainty and ongoing cost of living pressures.
“Whilst this has naturally created greater buyer choice and a more competitive marketplace for sellers, demand levels remain strong across many parts of the city.
“We’re continuing to see numerous examples of properties achieving sales at or above asking price where homes are priced realistically from the outset.
“With mortgage rates beginning to show signs of stabilising following recent volatility, underlying buyer confidence across the Derby market remains encouraging heading into the summer months.”
