Growth fell from 3.5% in April 2018, while on a monthly basis they increased by 0.1%.
It means the average property value stands at £226,351, according to the latest ONS House Price Index figures.
The annual growth rate has slowed since mid-2016 and has remained under 5%, with the exception of October 2017, throughout 2017 and into 2018.
The UK Property Transaction Statistics for May 2018 showed that on a seasonally adjusted basis, the number of transactions on residential properties with a value of £40,000 or greater was 99,590. This is 0.5% lower compared to a year ago. Between April and May 2018, transactions increased by 0.8%.
The regional data for England indicates that East Midlands was the fastest growing region with an annual house price growth rate of 6.3%, up from 5.1% in the previous month. The East Midlands also experienced the greatest monthly price rise, up by 1.7%.
London was the slowest growing region, falling by 0.4% in the year to May 2018, down from negative 0.3% in the previous month. This annual price fall takes the average property value to £478,853. This is the fourth month in a row that London house prices have fallen over the year. On a monthly basis, London shows that house prices have risen by 0.1% since April 2018.
In Wales, average house prices have fallen by 3% since April 2018. An annual price rise of 1% takes the average property value to £148,894.
John Goodall, CEO and co-founder of buy-to-let specialist Landbay, said: “The overall cost of living and outstandingly high deposit costs continue to prevent many aspiring homeowners from entering the market.
“More and more of the so called ‘Generation Rent’ have surrendered to the fact they may never own a home in their lifetime. As a result, the private rental sector is increasingly becoming a crucial part of the housing mix and needs to be supported now more than ever.
“Recent government initiatives to professionalise the buy-to-let market and improve tenancy conditions are certainly a step in the right direction, but investment in building more properties specifically designed to rent will help to ensure the cost of renting doesn’t hit unsustainable levels.”
Jeff Knight, marketing director at Foundation Home Loans, commented: “There may be new properties coming onto the market, but we need to wait until demand picks up to gather an accurate view. Those in a position to buy will certainly benefit from the choice available, but that’s not to say that affordability is anywhere near what it should be, even at this stage.
“These days we are seeing more people incorporate rental properties into their buying/selling process, again impacting the fluidity of the market. With one in five landlords intending to remain in the buy-to-let market indefinitely, it is crucial we maintain this interest and continue to provide high quality tenancy options and a range of choice for those wanting temporary accommodation before making that first step onto the housing ladder.”