The Halifax house price index for January showed that house prices rose 0.7% month-on-month, reversing the 0.5% monthly decline recorded in December.
Annually, average house prices were 1% higher, stronger than the 0.4% growth seen the month before.
Halifax said in recent years, house price growth had been relatively modest, but most of the gains were made during the pandemic. In the last three years, values have risen by 5.7% or around £16,000, with growth partially suppressed by higher interest rates and stretched affordability.
However, between 2020 and 2023, prices rose by 19% or more than £40,000, due to low borrowing costs and the demand for bigger homes.
Amanda Bryden, head of mortgages at Halifax, said the housing market entered the year on a “steady footing”, adding that although breaking the £300,000 barrier was “undoubtedly a milestone figure, and activity levels show a resilient market, affordability remains a challenge for many would-be buyers”.
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Bryden added: “Broader economic conditions continue to provide some support. Wage growth has been outpacing property price inflation since late 2022, steadily improving underlying affordability. That’s a positive trend for buyers, and the long-term health of the market.
“And we’re now seeing more mortgage deals below 4%. If inflation continues to ease, there should be further gradual reductions as the year goes on.
“All in all, we still think house prices are likely to edge up between 1% and 3% this year.”
She said the headline numbers could seem “daunting” but noted regional price differences.
North/South price divide deepens
Halifax found that the regional variances in house prices had become more pronounced, with strong growth in the North and more muted activity in the South.
Northern Ireland had the sharpest house price growth, rising 5.9% annually to £217,206. This was closely followed by Scotland, where prices increased by 5.4% year-on-year to average £221,711.
In Wales, house prices rose by 0.5% over the year to an average of £228,415.
Within England, most of the house price gains were concentrated in the North, with the North West recording an annual increase of 2.1% to £244,329, while in the North East, there was growth of 1.2% to £181,198.
Meanwhile, annual declines of more than 1% were seen in the South East, South West, London and East of England.
A moving housing market
Nathan Emerson, CEO of Propertymark, said: “As we progress further into the year, it is encouraging to see the housing market gathering pace. We are witnessing an increased flow of homes being brought to market, alongside growing confidence among buyers and sellers as they approach the moving process.
“Taking a broader view, lenders are also becoming increasingly competitive, expanding their range of mortgage products and improving access for those planning their next home move.
“However, affordability remains a key issue for many. To turn improving market conditions into meaningful access to homeownership, buyers need targeted support, a stable lending environment and policies that directly address affordability pressures across all tenures.”
Jason Tebb, president of OnTheMarket, said: “Post-Budget clarity has given the housing market a boost, with buyers and sellers who put moves on hold resolving to press ahead.
“Six interest rate reductions in the past 18 months have helped ease affordability and encourage activity. While the Monetary Policy Committee voted to hold rates this month, the vote was narrower than expected, suggesting further reductions to come, which should give those planning to move this year some confidence.
“While affordability concerns and increased stock levels keep property prices in check to an extent, nevertheless the housing market continues to demonstrate considerable resilience. While 2025 was a tough year, the early signs for 2026 are encouraging.”
