UK house prices have surged to another record high, with the average property price reaching £299,138, according to Halifax.
The UK’s largest mortgage lender, part of Lloyds Banking Group, reported that property values rebounded in January after experiencing a slight decline in December.
While annual price growth slowed to 3.0% – the weakest rate since July 2023 – Halifax noted that the housing market continues to demonstrate ‘noteworthy’ resilience.
The rate of annual property price inflation slowed in two thirds of the UK’s nations and regions at the start of the year.
NORTHERN IRELAND
Northern Ireland continues to have the strongest annual property annual price growth in the UK, though at +5.9% in January this eased considerably compared to December (+7.3%). Properties in Northern Ireland now cost an average of £205,473.
House prices in Wales were up +3.6% compared to the previous year, with properties now costing an average of £227,397.
Scotland once again saw a lower rise in house prices compared to the rest of the UK, with properties in the country now worth an average of £210,690, +2.4% more than the year before.
In England, the North East has overtaken the North West as the region with the strongest annual property price growth, up +5.2% compared to the previous year, with properties now costing an average £178,696. This is the first time since September 2023 that the North West has not topped the table of English regions for annual growth.
London retains the highest average house price in the UK, at £548,288, up +2.8% compared to last year.
RECORD HIGH
Amanda Bryden, Halifax Head of Mortgages, says: “The UK housing market started the year on a positive note, with average prices rising by +0.7% in January, more than recovering the slight dip of -0.2% in December.
“This increase pushed the average property price to a new record high of £299,138. However, annual growth slowed to +3.0%, the slowest rate since last July.
“Affordability is still a challenge for many would-be buyers, but the market’s resilience is noteworthy. There’s strong demand for new mortgages and growth in lending. With a stamp duty increase looming, some of this demand may have come from first-time buyers eager to complete transactions before the end of March.”
COST-OF-LIVING SQUEEZE
She adds: “Despite geopolitical uncertainties, and waning consumer confidence, other key indicators look fairly positive for the housing market. The Bank of England has made its first base rate cut of the year, and there are probably more to come. Household earnings are expected to continue outpacing inflation – albeit that gap may narrow – easing some of the financial pressure still being felt from the cost-of-living squeeze.
“As things stand, mortgage rates are likely to hover between 4% and 5% in 2025, influenced by both global financial markets and domestic monetary policy. Over the past year, buyers have been getting used to this new normal, understanding that rates are unlikely to return to the historical lows of 1%.
“But the fundamental issue in the housing market remains the lack of supply. This long-term trend, coupled with a gradual improvement in affordability, should support further modest house price growth this year.”
UNDERPINNING PRICES
Iain McKenzie, Chief Executive of The Guild of Property Professionals comments: “The increase of activity towards the end of 2024 spilled over into 2025, with buyers eager to get their transactions over the line before the stamp duty changes in April. This has underpinned house prices and kept them edging upwards.
“Amidst conflicting news reports, the latest forecasts from HM Treasury provide a modest improvement for both the economy and the housing market this year. With an improved economic backdrop, the stage is set for steady market activity and moderate price growth throughout 2025.
“While inflation remains above its target, it is significantly better than the high rates seen in 2023 and 2024, and the Bank of England is expected to cautiously continue on its cycle of lowering the base rate throughout the year – as evidenced by the rate cut yesterday, the first of 2025.
“Yesterday’s decision should further improve affordability, widening the buyer pool and sustaining price growth to some degree. However, realistic pricing remains key, as many properties are still selling below asking price. While market conditions are strengthening, sellers should remain mindful of pricing strategies to secure deals in this evolving landscape.”
MARKET REBOUND
Daniel Austin, CEO and co-founder at ASK Partners, said: “This rise in house prices marks a rebound from the unexpected recent fall. However, we believe this signals that growth this year is likely to face pressure and remain steady, as higher borrowing costs start to affect buyers, despite the market’s continued resilience.
“Investors and developers in the residential sector remain motivated by the supply demand imbalance and under the new government, we think there will be more projects that get off the ground. We are seeing a greater variety of housing options, such as co-living schemes, coming to market which fulfil the growing requirements of younger professional buyers.
“If prices flatten and interest rates start to fall, we will see more first-time buyers able to step onto the property ladder.”
CONFIDENCE BOOST
Nathan Emerson, Chief Executive of Propertymark, says: “As we embed ourselves into 2025, confidence is being echoed within the housing market, as house prices and mortgage lending remain buoyant.
“With the Bank of England announcing that interest rates are tracking downward, mortgage rates and financial pressures are now likely to continue to slowly improve in the imminent future for those looking to make their home move.”
FIRST-TIME BUYERS
David Johnson, Managing Director of property consultancy INHOUS, says: “January’s property market was driven by two buyer demographics in particular.
“First-time buyers rushing to beat the looming changes to Stamp Duty thresholds and, on the other spectrum of the market, high-net-worth-individuals and property investors who revaluated the UK property market following Rachel Reeve’s plans to soften her previously announced non-dom tax changes.
“The heightened demand has contributed to more competitive market conditions for house hunters and the majority of properties holding their value, however, buyers should not shy away from entering price negotiations.”
AFFORDABILITY CONSTRAINTS
Jason Tebb, President of OnTheMarket, says: “The housing market continues to shake off external economic concerns demonstrating remarkable resilience, with encouraging levels of activity and interest.
“The slowdown in annual growth suggests that affordability is keeping a lid on property values with buyers not prepared to pay inflated prices. Sellers should bear this in mind if they want to take advantage of the usually busier spring market.
“Higher interest rates have dampened activity so the latest rate cut from the Bank of England will be crucial in giving the market a boost. As we approach the end of the stamp duty concession in March, it will also give the market some needed impetus for later in the year, particularly if expectations of further rate cuts come to fruition.”
DIFFICULT TO CALL
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, says: “January was busier than normal, with a lot of market appraisals, which bodes well for a busy spring market.
“Increased activity from first-time buyers has helped, with more sales agreed in chains where someone is keen to take advantage of the stamp duty concession before it ends in March.
“The benefit to the first-time buyer is instant as it is real cash in their pocket, allowing someone to buy who might not have been able to, and the government perhaps needs to consider further stimulus for the market in its Spring statement.
“While all this suggests growing confidence, it’s too soon to say for certain how the market will unfold.”
ECONOMIC WORRIES
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “On the ground, recent price resilience has been just as much to do with higher demand as much as insufficient and appropriate stock in more popular areas.
“We are finding many of those sellers who don’t have to move are not accepting realistic offers, though hopefully yesterday’s base rate cut will raise confidence and get more people moving.
“However, continuing worries about the economy and particularly inflation, as well as the pace of further rate reductions, is already preventing prices steaming ahead faster.”
ROBUST ACTIVITY
Guy Gittins, Chief Executive of Foxtons, says: “The UK property market has certainly picked up where it left off last year, as the increasing momentum seen across the sales market throughout 2024 has continued to flow into the new year, further cultivating the rate of house price growth seen across the market and pushing the average house price to a record high.
“This has been driven by a degree of added urgency from first-time buyers keen to complete ahead of April’s stamp duty deadline, as well as a greater degree of acceptance from homebuyers of the adjustment to interest rates over time.
“Market activity remains robust and it’s clear that the nation’s buyers and sellers are hitting the ground running this year. In fact, we’ve seen buyer enquiries and viewings numbers remaining consistent with the latter stages of last year.
“All signs currently point to a prosperous year ahead with respect to property values and those considering a sale in 2025 should be looking to list their home on the market sooner, rather than later.”
SEASONAL SLUMP
Verona Frankish, Chief Executive of Yopa, says: “A new year and a new record high for UK house prices, as the market shook off the seasonal slump seen in December to register positive growth both on a monthly and annual basis.
“This demonstrates that the growing momentum seen over the course of last year has remained, with homebuyers hitting the ground running in 2025.
“Whilst the current stamp duty deadline is certainly a factor in this positive start to the year, we expect market health to continue to improve long beyond 1st April, with market sentiment already receiving a welcome boost in the form of an interest rate reduction yesterday.”
BOUNCE BACK
Marc von Grundherr, Director of Benham and Reeves, says: “The property market has bounced back following a brief pause for breath over the Christmas period and we’ve already seen an incredibly busy start to the year, with more buyers entering the market and a surge in stock levels as the nation’s sellers look to capitalise on this increase in market activity.
“We’ve also seen lenders move to reduce mortgage rates in anticipation of yesterday’s interest rate reduction and, whilst affordability remains an obstacle, we expect market activity to only strengthen as buyers benefit from lower borrowing costs.”
SIGNS OF STABILITY
Tom Bill, head of UK residential research at Knight Frank, says: “Supply has risen more than demand in 2025, which should keep downwards pressure on prices in the short-term.
“Underpinned by a stamp duty rise in April, there have been tentative signs of stability in recent weeks, especially among needs-driven buyers in equity-rich markets where the impact of higher mortgage rates has been felt less acutely.
“How long that lasts depends on the bigger economic picture, including whether the UK gets caught in the crossfire of a trade war between the US and EU, how stubborn inflation proves to be and the impact of the Chancellor’s fast-disappearing financial headroom.”
CHEAPER MORTGAGES
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: “Modest house price growth is being underpinned by borrowing costs which, while softening, remain higher than many borrowers were paying just a few years ago.
“With the Bank of England cutting interest rates this month, and the expectation of further reductions to come, this should encourage borrowers to make their move.
“Swap rates continue on a downwards path with some lenders dropping their mortgage rates, in part reversing recent increases.
“The latest rate cut was largely expected by the markets and has been factored into pricing already but a continual decline in swaps would enable lenders to price more keenly, easing borrowers’ affordability concerns.”
