UK house prices have surged by 0.7% month-on-month in January, soaring to a new record average and just short of the £300,000 mark according to an index.
Halifax reported that the average property price in January stood at £299,138. On an annual scale, prices increased by 3.0% in January. Amanda Bryden, head of mortgages at Halifax commented: “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.”
She continued to point out the challenges of affordability for many potential buyers but highlighted the market’s resilience as 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.”
Despite geopolitical uncertainties and diminishing consumer confidence, Bryden suggests other key indicators appear optimistic 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.”
Holly Tomlinson, a financial planner at Quilter, commented: “One potential positive came yesterday when the Bank of England cut interest rates to 4.5%. Although the cut came as little surprise, it should continue to ease affordability and perhaps give more people the impetus to dust off any previously shelved house buying plans.
“Lenders had already been trimming rates in anticipation of this move, and with expectations of further cuts later in the year more buyers are likely to join back into the market.”
Iain McKenzie, chief executive of the Guild of Property Professionals, stated: “The decision to cut the interest rate 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.”
Tom Bill, head of UK residential research at Knight Frank, commented on market trends, remarking: “Supply has risen more than demand in 2025, which should keep downwards pressure on prices in the short-term.”
In the mortgage sector, Mark Harris, chief executive of SPF Private Clients, provided insight into interest rates, saying: “Swap rates (which are used by lenders to price mortgages) continue on a downwards path with some lenders dropping their mortgage rates, in part reversing recent increases.”
He added: “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.”
For those in the market for a new mortgage, Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, advised: “Amid so much uncertainty, those hunting for a new mortgage should remember to analyse offers carefully and consult a reputable broker to help them find the right solution for their needs.”
She warned that potential buyers need to be cautious about fees, stating: “Lenders can be guilty of using more attractive rates to mask high arrangement or product fees. Calculating the overall cost of the product is imperative to determine if one product works out cheaper than another.”
Pricing trends were also shown in the most recent house price data from Halifax, presenting average house prices alongside annual increases (based on the most recent three months of approved mortgage transaction data):.
East Midlands, £245,352, 3.3%.
Eastern England, £337,267, 2.7%.
London, £548,288, 2.8%.
North East, £178,696, 5.2%.
North West, £239,772, 4.5%.
Northern Ireland, £205,473, 5.9%.
Scotland, £210,690, 2.4%.
South East, £391,298, 2.9%.
South West, £308,424, 4.0%.
Wales, £227,397, 3.6%.
West Midlands, £261,280, 4.0%.
Yorkshire and the Humber, £215,764, 4.6%.
