House prices rose in January, reversing December’s decline and pushing the average UK property value above £300,000 for the first time.

The Halifax House Price Index shows average prices increased by 0.7% in January, following a 0.5% fall in December. The typical UK home is now valued at £300,077, taking annual growth to 1.0%, up from 0.4% the previous month.

Amanda Bryden, head of mortgages at Halifax, said: “The housing market entered 2026 on a steady footing, with average prices rising by 0.7% in January, more than reversing the 0.5% fall seen in December. Annual growth also edged higher to 1.0%, pushing the cost of the typical UK home above £300,000 for the first time.

“While that’s undoubtedly a milestone figure, and activity levels show a resilient market, affordability remains a challenge for many would-be buyers.

“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.”

HOW THE AVERAGE PRICE REACHED £300,000

Despite the headline milestone, Halifax said recent house price growth has been relatively subdued when compared with the pandemic boom.

Over the past three years, prices have risen by 5.7%, equivalent to around £16,000, as higher interest rates and stretched affordability constrained growth. By contrast, values increased by almost 19%, or more than £44,000, in the three years from 2020 to 2023, driven by ultra-low borrowing costs and a surge in demand for larger homes.

Bryden added: “For first-time buyers the headline numbers can seem daunting, but it’s important to remember that most are looking at smaller properties in areas that reflect their budget. Many locations offer far more accessible price points, especially in northern regions where homes can often be found for under £200,000.

“Affordability is still a challenge, but stronger wage growth and falling mortgage rates have helped relieve some of the pressure in recent years. We expect that improvement to continue in 2026, meaning that with the right support and advice, home ownership should become a realistic prospect for more would-be buyers.”

NATIONS AND REGIONS

Regional differences are becoming more pronounced, with northern areas continuing to outperform the south.

Northern Ireland recorded the strongest annual growth, with prices up 5.9% to £217,206, followed by Scotland where values rose 5.4% to £221,711. In Wales, prices increased by 0.5% over the year to an average of £228,415.

Within England, growth remained concentrated in the north. The North West saw prices rise 2.1% to £244,329, while the North East recorded annual growth of 1.2%, taking the average price to £181,198.

In contrast, prices in the South East, South West, London and eastern England all fell by more than 1% over the year. As the most expensive parts of the country, these markets remain more sensitive to higher borrowing costs and taxes.

MOMENTUM REMAINS CONSTRAINED

Daniel Austin, CEO and co-founder at ASK Partners, said: “Today’s modest rise in UK house prices points to underlying resilience, but momentum remains constrained by affordability pressures and a ‘higher for longer’ interest rate backdrop.

“While recent rate cuts signal easing inflation, they are unlikely to transform market conditions overnight.

“Mortgage pricing has improved, yet buyer and developer confidence remains fragile following a Budget that offered little direct stimulus for housing.

“The market is increasingly being shaped by structural rather than cyclical forces. The UK’s forecast 1.4% growth rate, relative outperformance versus the eurozone, and sustained interest from Gulf and Southeast Asian capital continue to support long-term confidence.

“However, mainstream buyer activity remains subdued, with demand instead flowing into structurally undersupplied rental markets, particularly build-to-rent and co-living in well-connected suburban and commuter locations.

“While proposed planning and affordable housing reforms may improve scheme viability at the margin, elevated construction and financing costs will continue to pressure margins in the near term.

“A clearer downward path for rates towards the 3.5% range would help unlock stalled projects. Until then, capital is favouring resilient, income-led segments such as logistics, data centres, storage and other operational real estate, with real estate debt offering an attractive way to generate secured income while managing downside risk in a still-cautious market.”

Jeremy Leaf, a north London estate agent and former RICS residential chairman, said: “There is no question now that the housing market is on the move. Enquiries and sales agreed have increased markedly and the market is demonstrating resilience.

“On the other hand, the rise in listings this year, reluctance of the Bank of England to cut interest rates more rapidly and ongoing concerns about the economy mean that house prices are unlikely to increase significantly, which will be welcome news for first-time buyers in particular.”

AFFORDABILITY STILL AN ISSUE

Tomer Aboody, director at MT Finance, said: “Even through the tough times, the housing market remains remarkably stable with buyers and sellers continuing to transact, albeit at a slower pace.

“The interest rate environment is helping, with sentiment pointing towards further cuts this year and lenders keen to offer attractive mortgage rates.

“Nevertheless, affordability is still an issue, with cheaper regions seeing the strongest price growth while the more expensive south of England remains sensitive to higher borrowing costs and taxes.

“The high cost of moving is also deterring many from doing so, deciding to stay put and improve existing homes instead.

“Stamp duty in particular is a barrier to mobility, and with the Chancellor missing 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.”