Property experts said the housing market is gaining momentum (Daniel Leal-Olivas/PA) (Image: PA Archive/PA Images)
The average UK house price increased by 0.3% in January, following a 0.4% decrease in December, according to a building society report. Housing market activity is expected to pick up in the coming months as « affordability constraints ease ».
Property values climbed by 1.0% in January on a yearly basis, pushing the average house price to £270,873, Nationwide Building Society announced. Robert Gardner, Nationwide’s chief economist, said: « The start of 2026 saw a slight pick-up in annual house price growth, which rose to 1.0% in January, after slowing to 0.6% in December. Prices increased by 0.3% month-on-month in January, after taking account of seasonal effects.
READ MORE: Households can claim up to 90% discount on water bills – full list of support
READ MORE: Smart meter rule change means thousands eligible for £40 compensation
UK house prices rose 0.3% in January 2026 to an average of £270,873, Nationwide reports (Image: Getty)
« Housing market activity also dipped at the end of 2025, most likely reflecting uncertainty around potential property tax changes ahead of the Budget. Nevertheless, the number of mortgages approved for house purchase remained close to the levels prevailing before the pandemic.
« Housing market activity is likely to recover in the coming quarters, especially if the improving affordability trend seen last year is maintained. »
He continued: « Affordability constraints have eased over the past year, thanks to earnings growth outpacing house price growth and also a steady decline in mortgage rates. This has helped underpin buyer demand, with first-time buyer activity over the last year continuing to edge higher as a share of house purchases. »
He explained that a potential purchaser earning a typical UK salary and acquiring a standard first-time buyer home with a 20% deposit would face monthly mortgage repayments representing 32% of their net income – marginally higher than the historical average of 30% yet considerably lower than the recent peak of 38%, previously reached in 2023.
Mr Gardner noted that, unlike other parts of the UK, Northern Ireland has experienced worsening affordability during the past year, attributed to robust house price increases in the region.
He added: « Affordability pressures remain pronounced in the South of England, whilst in the North, Yorkshire and the Humber and Scotland, mortgage payments as a share of take-home pay are slightly below their long-run average.
« These regional variations in affordability have led to some stark differences emerging between those who would like to buy and those who can do so. »
Alice Haine, a personal finance analyst at Bestinvest by Evelyn Partners, said: « The combination of falling interest rates, moderating inflation – albeit with a few bumps along the way – and stronger real wage growth should help underpin housing market confidence.
Our community members are treated to special offers, promotions, and adverts from us and our partners. You can check out at any time. Read our Privacy Policy
« The quarter-point (Bank of England base) rate cut delivered in December is unlikely to be repeated at the next rate decision meeting this week, with markets expecting the Bank of England to hold steady while it digests fresh data. »
Iain McKenzie, chief executive of the Guild of Property Professionals, said: « After a hesitant end to last year, this modest rise reflects renewed buyer confidence and a sense that the market is regaining momentum.
« The final quarter of 2025 was dominated by uncertainty, with many buyers pausing decisions ahead of the autumn Budget. While activity dipped in December, we’ve seen a rebound in demand at the start of this year as buyers return to the market, encouraged by easing mortgage rates and a more predictable economic backdrop. »
He added: « Although inflation remains a factor and rate cuts are likely to be gradual, lower borrowing costs and rising incomes mean mortgage costs are becoming more manageable than they have been for several years.
« A growing supply of homes for sale is also giving buyers more choice and keeping price growth in check. This should support a healthier level of transactions in 2026, but sellers will need to remain realistic on pricing and responsive to local market conditions to achieve successful sales. »
Amy Reynolds, head of sales at London-based estate agency Antony Roberts, said: « While this is not a runaway market, it is a far healthier one than a year ago. »
Jason Tebb, president of OnTheMarket, said: « A number of lenders reduced their mortgage rates in January and most of the agents we have spoken to have seen a better start to this year than (the first quarter of) 2025. »
Nicky Stevenson, managing director at Fine & Country, said: « As confidence in the market strengthens, we expect this momentum to carry through into spring. For sellers, now is a good time to ensure properties are presented and priced to reflect local market conditions, as we tend to see an influx in viewings as the weather improves and nights become lighter. »
Tom Bill, head of UK residential research at Knight Frank, said: « The chances of two rate cuts this year have faded in recent weeks for reasons that include stronger-than-expected UK economic data, which underlines how prices and transaction levels will remain under pressure.
« The absence of political drama over the next few months would help confidence grow, but that might be wishful thinking. »
