UK asking prices rose 1.2% in May, above seasonal norms, while a separate survey showed British employer confidence near record lows with pay awards set to lag inflation.
Summary:
- Rightmove reported UK asking prices rose 1.2% month-on-month in May, above the typical 1.0% seasonal increase, while the average two-year fixed mortgage rate eased to 5.18% from 5.42% a month earlier, according to Reuters reporting on the Rightmove data. Annual prices remained 0.3% lower, homes for sale held at an 11-year high, and sales agreed were 4% below year-ago levels.
- The CIPD survey of 2,049 UK employers, conducted between March 23 and April 23, found cost management was the top business priority ahead of productivity and market share growth, with confidence indicators near record lows and planned pay awards of around 3% likely to fall short of inflation forecasts, per Reuters.
- The CIPD survey was completed before Labour’s heavy local election losses increased political pressure on Prime Minister Keir Starmer, meaning the full impact of that instability is not captured in the data.
Two sets of UK data released on Monday painted a divided picture of the British economy, with the housing market showing unexpected resilience in May while employer confidence remained pinned close to record lows and pay growth looked set to fall behind inflation.
Rightmove reported that asking prices for British homes rose by 1.2% in May compared with April, exceeding the 1.0% monthly increase typically seen at this time of year and accelerating from the 0.8% gain recorded in April. Despite the stronger monthly reading, prices remained 0.3% lower than a year earlier, and sales agreed were running 4% below their level from the same period in 2025, though 2% ahead of the equivalent period in 2024.
A notable feature of the Rightmove data was the easing of mortgage costs, with the average two-year fixed rate falling to 5.18% on May 11 from 5.42% a month earlier, providing some relief for buyers. The number of homes on the market held at an 11-year high, keeping supply elevated, while annual price falls in the first-time buyer segment were said to be easing affordability pressures in London and the southeast. Activity in the market was described as staying fairly steady despite ongoing cost-of-living pressures and wider global uncertainty.
The picture from employers was considerably more subdued. The Chartered Institute of Personnel and Development, surveying 2,049 businesses between late March and late April, found that cost management had become the overriding priority for British firms, ranking above improving productivity or expanding market share. Confidence indicators held near record lows, and the Iran conflict had not yet materially affected hiring intentions, though the survey’s timing means it predates the latest bout of political uncertainty following Labour’s significant losses in local and regional elections.
Planned pay awards of around 3% for the coming year were broadly unchanged from the past two years but below most forecasts for inflation over the same period, pointing to a real-terms squeeze on household incomes that could weigh on consumer spending and dampen any broader economic recovery.
—
The divergence between a firmer housing market and near-record-low employer confidence reflects an economy caught between improving financial conditions and persistent macro uncertainty. The easing of the two-year fixed mortgage rate to 5.18% will offer some relief to buyers and may support transaction volumes, though annual price declines and sales still running below year-ago levels suggest the recovery remains fragile. The CIPD data is more concerning for growth, with planned pay awards of around 3% set to fall below most inflation forecasts, pointing to a real-terms wage squeeze ahead
