UK house price growth edged higher in January, with annual growth rising slightly to 1% and prices up 0.3% month-on-month, according to the latest Nationwide House Price Index.
Improved affordability helped support first-time buyer activity throughout 2025.
| Headlines | Jan-26 | Dec-25 |
|---|---|---|
| Monthly Index | 544.9 | 543.4 |
| Monthly Change | 0.3% | -0.4% |
| Annual Change | 1.0% | 0.6% |
| Average Price(not seasonally adjusted) | £270,873 | £271,068 |
Robert Gardner, Nationwide’s chief economist, says: “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.
“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 (and explored further below) is maintained.”
Improved affordability has helped underpin buyer demand, with first-time buyer activity over the last year continuing to edge higher as a share of house purchases.
Gardner continues: “Our main affordability benchmark shows that a prospective buyer earning the average UK income and buying a typical first-time buyer property with a 20% deposit would have a monthly mortgage payment equivalent to 32% of their take-home pay.
“This is slightly above the long-run average of 30% and well below the recent high of 38% recorded in 2023.”
Reaction
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “Mortgage rates beginning to drift down again, with realistic prospects for more, is not only helping to enhance affordability but more importantly rebuild the confidence of buyers and sellers who were holding back before the Budget fearing a more significant hit.
“Interestingly, these historically-reliable figures reflect price rises happening before and since that period of uncertainty.
“The increase in stock, including a steady flow of landlords still quitting buy-to-let before the Renters Rights Act becomes law in May, has reduced buyer confidence and kept a lid on higher prices.
“Looking forward, it is only those vendors with realistic expectations who will be able to take advantage of the improvements in activity.”
Amy Reynolds, head of sales at London agency Antony Roberts: “While this is not a runaway market, it is a far healthier one than a year ago.
“Transactions are slowly improving and values have proved resilient, particularly where homes are priced realistically.
“We’re seeing far more purposeful buyers than we did in the autumn, and assuming interest rates remain supportive, the spring market looks encouraging with momentum continuing to build.”
Jason Tebb, president of OnTheMarket: “Housing market activity and sentiment have picked up since the Budget has been in the rear-view mirror, with buyers and sellers able to proceed with their moves with clarity and confidence.
“The resilience the market demonstrated last year continues to make itself felt.”
Tomer Aboody, director of specialist lender MT Finance: “The high cost of moving is still there, however, and putting off many from doing so, choosing to stay put and improve existing homes instead.
“Stamp duty in particular is a barrier to mobility, and the Chancellor missed an opportunity to reduce or reform it in her Budget.
“The hope is that further interest rate reductions this year will improve affordability and further encourage first-time buyers onto the ladder.”
