On a monthly basis, prices went up by 0.9%, which is the tenth monthly rise in a row.
The average house price in the UK now comes in at £269,914.
Nationwide points to “strong labour market conditions” and a lack of housing stock as reasons for such a strong market, “Despite growing headwinds from the squeeze on household budgets due to high inflation and a steady increase in borrowing costs.”
The lender’s chief economist Robert Gardner adds: “We continue to expect the housing market to slow as the year progresses. Household finances are likely to remain under pressure with inflation set to reach double digits in the coming quarters if global energy prices remain high.”
Hargreaves Lansdown senior personal finance analyst Sarah Coles says: “House price growth was still [… ] impressive, but it was down again in May for the second consecutive month, and Nationwide has added its voice to those predicting price rises will continue to drop away as we go through the year.
“When you add in the Bank of England figures yesterday showing mortgage approvals have fallen below the pre-pandemic average, and the Zoopla figures from earlier in the week revealing more sellers are cutting prices and properties are taking longer to sell, the market looks as though it’s starting to shift.
“We’re not expecting a blight to strike the market, because right now, demand is still outstripping supply, which is likely to keep prices from falling. However, over the coming months, we’re likely to see buyers take their time, exercise a bit more caution, and house price rises to slow significantly.”
Garrington Property Finders chief executive Jonathan Hopper has similar thoughts. He says: “At first glance the headline figures suggest the housing market is blissfully unaware of the cost of living crisis.
“The annual rate of price growth remains comfortably in double figures and the monthly change in prices – up 0.9% in May alone – has accelerated rather than slowed.
“But behind the scenes t. has been a decisive change. W. previously price growth was fuelled by a market brimming with confidence, today’s market is being fuelled by buyers’ desperation to find a home before interest rates rise further and the cost of living bites deeper.
“The current price momentum can only last so long in the face of rapidly weakening consumer confidence. With millions of Britons simultaneously grappling with surging fuel, energy and food prices, some will inevitably have to postpone or rethink their plans to buy a home.”
He continues: “The market is entering a period of uncertainty, but one thing is clear – despite these apparently ‘business as usual’ growth figures, economic gravity is starting to assert itself.”