After a year of falling prices, the average house price in the capital inched up by 0.2% in May. This means the average London property will now set you back a cool £523,000!

This positive shift, revealed in the latest figures from the Office for National Statistics (ONS), marks the first annual rise since May 2023. It suggests that the impact of those pesky high interest rates might finally be easing.

Across the rest of the UK, the property market is also looking rosier. The average house price across the country jumped by a healthy 2.2% to £285,000. That’s the fastest increase since March 2023, marking the third consecutive month of growth after a long slump.

So, what’s behind this turnaround? Experts reckon it’s down to a few key things:

• Mortgage rates are stabilising. While they’ve been creeping up since February, fuelled by the rising cost of living, things seem to be calming down. This means potential buyers have a clearer idea of what they’ll need to pay each month, boosting confidence.
• Inflation is under control (for now!). The good news is that inflation held steady at the Bank of England’s target of 2% in June. This has helped to settle those jumpy mortgage rates, giving buyers more reassurance.
• Wages are finally starting to catch up with the cost of living. This means people have a bit more cash in their pockets, which always helps when you’re trying to save for a deposit or cover those monthly mortgage payments!

But before we get too carried away, it’s worth noting that London’s growth of 0.2% is still the weakest out of all UK regions. It seems the capital is still playing catch up after property prices went through the roof a few years back.

Meanwhile, other parts of the country are seeing much stronger growth. Yorkshire and the Humber take the crown for the fastest price rises, with a 3.9% surge in the year to May.

Rents are still rising, but there’s a glimmer of hope. The cost of renting continues to climb, but the pace of growth is slowing down. Rents rose by 8.6% in the year to June, down from a record high of 9.2% in March.