"For first-time buyers, the headline numbers can seem daunting, but it's important to remember that most are looking at smaller properties in areas that reflect their budget"
- Amanda Bryden - Halifax
House prices increased 0.7% in January, reversing December's 0.5% decline and pushing the average UK property value to £300,077. Annual growth reached 1.0%, up from 0.4% the previous month.
Regional variations in performance have grown more distinct, creating a clear north-south divide across the country. Northern areas maintain momentum from 2024, with demand and price growth holding firm.
Northern Ireland leads the UK with annual growth of 5.9%, taking average prices to £217,206. Scotland follows with 5.4% growth, bringing typical values to £221,711. Wales recorded a modest 0.5% annual increase, with average homes now costing £228,415.
Within England, the strongest growth remains in northern regions. The North West saw prices climb 2.1% to £244,328, while the North East recorded 1.2% annual growth, with typical properties now at £181,198.
Southern regions have experienced price declines. The South East, South West, London and Eastern England all recorded annual falls exceeding 1%. These four most expensive areas tend to respond more sharply to higher borrowing costs and taxes, which affect affordability and buyer confidence.
"The housing market entered 2026 on a steady footing, with average prices rising by 0.7% in January, more than reversing the -0.5% fall seen December," said Amanda Bryden, head of mortgages at Halifax. "Annual growth also edged higher to 1.0%, pushing the cost of the typical UK home above £300,000 for the first time."
She added that while the milestone figure reflects a resilient market, affordability remains challenging for many prospective buyers.
"Broader economic conditions continue to provide some support. Wage growth has been outpacing property price inflation since late 2022, steadily improving underlying affordability," Bryden explained. "That's a positive trend for buyers, and the long-term health of the market."
More mortgage deals below 4% are now available. If inflation continues to ease, further gradual reductions should follow throughout the year, according to Bryden.
Halifax forecasts house prices will rise between 1% and 3% in 2026.
Despite crossing the £300,000 threshold, growth in recent years has been relatively modest following sharp pandemic-era increases. Over the past three years, property prices have risen 5.7%, or around £16,000, as higher interest rates and stretched affordability kept growth muted.
This contrasts with the three years from 2020 to 2023, when prices climbed nearly 19% (over £44,000), driven by ultra-low borrowing costs and demand for space.
"For first-time buyers, the headline numbers can seem daunting, but it's important to remember that most are looking at smaller properties in areas that reflect their budget," Bryden noted. "Many locations offer far more accessible price points, especially in northern regions where homes can often be found for under £200,000."
While affordability remains challenging, stronger wage growth and falling mortgage rates have relieved some pressure in recent years. Bryden expects that improvement to continue in 2026, meaning home ownership should become realistic for more prospective buyers with appropriate support and advice.
Tom Bill, head of UK residential research at Knight Frank, said, “House prices rose in January as decisions delayed ahead of the November Budget were activated either side of Christmas."
"However, momentum has since faded and mortgage approvals are running 9% below the five-year average, which shows demand is on a knife-edge. Mortgage lenders have pushed their rates higher in recent weeks as the chances of multiple Bank Rate cuts this year recede, although a reduction next month seems likely."
"As inflation comes under control, we expect demand and activity to steadily improve over the coming months, although a challenge to the Prime Minister’s position could derail that recovery.”
Verona Frankish, CEO of Yopa, commented, “The latest Halifax data reinforces building evidence that the market has found a more stable footing at the start of 2026, with homebuyers returning in greater numbers after the seasonal slowdown seen in December."
"These figures also suggest that they are doing so with renewed purchasing power, with the increase seen in mortgage-approved house prices being driven by improvements to the lending landscape."
"However, a degree of pragmatism is still required on the side of the nation’s home sellers, as trying to price above current market values will inevitably see them struggle to secure interest, even with improving market sentiment.”
Director of Benham and Reeves, Marc von Grundherr, commented, “The latest Halifax figures mirror those from Nationwide earlier this week and provide further evidence that the housing market has hit the ground running in 2026, with the seasonal month-on-month decline seen in December now giving way to green shoots of positive house price growth."
"This shift suggests that buyers are re-entering the market with greater confidence and a stronger willingness to transact at higher price points, supported by improving affordability and greater clarity around mortgage costs."
"While some buyers may have been disappointed not to see interest rates cut yesterday, the ongoing stability provided by a hold will help to drive market momentum forward as the year progresses.”
