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UK Home Prices Climb 1.2%; Employer Confidence at Record Lows
UK May home prices rose 1.2% above seasonal norm. Employer confidence stays near record low. 3% pay awards lag inflation. Separate CIPD survey shows cost management top priority.
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Two UK data releases on Monday sent mixed signals. Asking prices rose 1.2% in May, beating the 1.0% seasonal norm, while the CIPD survey showed employer confidence pinned near record lows and planned pay awards of about 3% set to fall behind inflation. For GBP traders, the divergence complicates the Bank of England’s rate path and creates a two-sided narrative that keeps sterling range-bound.
UK Housing: Asking Prices Above Seasonal Norm
Rightmove reported that asking prices for British homes rose 1.2% in May compared with April, accelerating from the 0.8% gain recorded in April. The monthly increase exceeded the 1.0% increase typically seen at this time of year. Despite the stronger monthly reading, prices remained 0.3% lower than a year earlier. Sales agreed were running 4% below their level from the same period in 2025, though 2% ahead of the equivalent period in 2024.
Mortgage Costs Ease to 5.18%
The average two-year fixed mortgage rate fell to 5.18% on May 11 from 5.42% a month earlier. That easing provided some relief for buyers and supported the pick-up in asking prices. The number of homes on the market held at an 11-year high, keeping supply elevated. 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.
Transaction Volumes Lag Year Ago
Sales agreed running 4% below the 2025 level suggest the recovery in transaction volumes remains incomplete. The annual price decline of 0.3% reinforces that the housing market is finding a floor rather than launching a sustained upturn. The resilience in asking prices offers a modest positive for sterling: the risk of a sharp housing-led downturn has receded. The transmission to consumer confidence and spending is less clear, since actual purchases have not yet rebounded to pre-inflation-shock levels.
Employer Confidence: Cost Management Over Growth
The picture from employers was considerably more subdued. The Chartered Institute of Personnel and Development surveyed 2,049 businesses between late March and late April. Cost management had become the overriding priority for British firms, ranking above improving productivity or expanding market share.
CIPD Survey Shows Record Low Confidence
Confidence indicators held near record lows. 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. The survey confirms that businesses are in a holding pattern, prioritising cost control over expansion. That stance is consistent with a labour market that is cooling rather than cracking – a scenario that gives the BoE room to hold rates without triggering a sharp rise in unemployment.