According to Nationwide’s House Price Index, the average house price currently stands at £273,173, up from £270,873 in January.
The report noted that monthly house price changes stood at 0.3%, which is also in line with the previous month’s figures.
Robert Gardner, Nationwide’s chief economist, said the steady house price growth “reinforces the view of a modest recovery after a dip at the end of 2025”.
Nationwide figures show that annual house price growth in October came to 2.4%, before falling to 1.8% in November and then 0.6% in December.
Gardner said this was likely due to uncertainty around potential property tax changes in the Budget, although the number of mortgages approved for house purchase was close to pre-pandemic levels.
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He said that across 2025, total housing market transactions were 10% up on the previous year.
First-time buyer mortgage completions rose by around 18% year-on-year, attributed to improved affordability and an easing in credit availability.
Homemover transactions with a mortgage also rose by 15% year-on-year and there has been a gradual rise in buy-to-let (BTL) mortgage purchases, but activity remains subdued due to “continued headwinds”.
Gardner added that cash transactions were at a similar level to 2025, making up 35% of purchases. He said there had been a fall in this proposition, with cash transactions hitting a peak of 42% in 2023.
He said housing market activity is “likely to recover in the coming quarters, especially if the improving affordability trend seen last year is maintained as expected”.
Housing market showing ‘tentative signs of recovery’
Alice Haine said the figures show that the housing market “continues to show tentative signs of recovery”.
She added that the rebound in activity is “largely driven by a surge of sellers listing their homes”, with 6% more homes on the market than a year ago.
“This increase points to improving confidence as more homeowners look seek to capitalise on strengthening conditions to move, including more competitive mortgage rates and the widest choice of low-deposit mortgages for first-time buyers in almost two decades.
“An increase in the number of properties on the market is likely to prove positive for buyers – many of whom remain concerned about economic uncertainty, cost-of-living pressures and elevated interest rates – as greater choice may place them in a stronger position to negotiate on price. However, this could temper house price growth if sellers are forced to keep pricing realistic to secure a sale,” Haine noted.
She noted that there were “longer-term implications” of Chancellor Rachel Reeves’ recent property tax measures.
“A new mansion tax from April 2028, via a council tax surcharge on properties valued above £2m, may have a dampening effect at the upper end of the market. Meanwhile, that surprise two-percentage-point property income tax hike – set to go live in April next year – is likely to hit the buy-to-let sector hard, with many landlords, who have already endured years of tax and regulatory changes, already heading for the exit,” she said.
However, Haine said the early-year pick-up in stock levels will be positive for movers looking to progress transactions as affordability levels are “slowly improving”, as mortgage rates have eased significantly over the past year, backed by six interest rate cuts since August 2024.
“While markets have been increasingly optimistic that a seventh rate cut will present itself in March, the outlook has become more uncertain following events over the weekend. UK inflation had been expected to ease back sharply to the Bank of England’s target of 2% by April, with the cocktail of rising unemployment, sluggish economic growth and slowing wage growth expected to provide enough impetus for the central bank to vote for another 25-basis-point reduction.
“However, an increasingly uncertain geopolitical backdrop amid renewed tensions in the Middle East may scupper that expectation if energy prices rise dramatically and supply chains are disrupted by the conflict,” she noted.
Haine said that if another rate cut does materialise, it would be a “great relief for homeowners looking to refinance”, especially the 1.8 million mortgage holders with fixed rate deals expiring in 2026.
“Many of those borrowers are rolling off ultra-low-rate, five-year fixes into a much higher interest rate environment. They face refinancing at much higher rates than their current deal, which will put pressure on disposable incomes, though they can take comfort that they have avoided the worst of the mortgage crisis.
“Those refinancing shorter-term deals are likely to feel more optimistic about their outlook. Falling mortgage rates have improved affordability levels for buyers, while a more flexible lending landscape, alongside broader product choice, is making it easier for first-home purchasers to get on the ladder.
“Anyone remortgaging or securing a first home loan should seek guidance from an independent broker who can scour the market and help existing borrowers avoid costly standard variable rates. Once a new product is secured, it is crucial to stay in close contact with your broker, particularly if another rate cut materialises, as they can often switch you to a better rate right up until two weeks before the term starts, if conditions continue to improve,” she concluded.
