House prices increased by 0.7% in January following dip of -0.2% in December, the latest Halifax House Price Index has revealed.
The index revealed the average property price throughout the month hit £299,138, a new record high.
Hoswever, annual growth eased slightly to 3.0%, compared to 3.4% previous month.
On a regional basis, 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 continued 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 costed an average of £205,473.
House prices in Wales were up 3.6% compared to the previous year – with properties 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 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 averaging at £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 retained the highest average house price in the UK, at £548,288, up 2.8% compared to last year.
Reaction:
Nathan Emerson, CEO of Propertymark:
“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.”
Mark Harris, chief executive of mortgage broker SPF Private Clients:
“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.”
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts:
“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.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“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.”
Tomer Aboody, director of specialist lender MT Finance:
“While the numbers suggest a confident market, actual growth in prices is minimal as buyers face affordability challenges.
“Reduced interest rates tend to encourage buyers and sellers to be active, as we saw towards the end of last year, so yesterday’s rate cut should help with market confidence.
“The full impact of the Budget has yet to be factored in, so a true indication of where we are would be around spring, when the Stamp Duty holiday ends.”
Guy Gittins, CEO of Foxtons:
“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.”
Verona Frankish, CEO of Yopa:
“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.”
Marc von Grundherr, director of Benham and Reeves:
“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.”
Holly Tomlinson, financial planner at Quilter:
“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.
“For first-time buyers, this offers a glimmer of hope, as affordability has been stretched to breaking point in recent years.
“Lower mortgage rates should make repayments more manageable, but securing a property will remain a challenge, particularly with the changes to stamp duty looming in April.
“The threshold for first-time buyers will drop from £425,000 to £300,000, meaning those purchasing a home above this level could suddenly find themselves facing an extra tax bill.
“This will hit buyers in higher-cost areas particularly hard too, making an already difficult climb onto the property ladder even steeper.
“More broadly, the cut to interest rates could provide some much-needed momentum for the market.
“If buyers sense that borrowing costs have peaked and are starting to fall, demand could increase, supporting house prices in the months ahead.
“However, affordability remains tight, and with housebuilding still lagging behind demand, competition for available properties could keep prices elevated.
“Although the headline news of a cut in interest rates certainly should help borrowers, there are still some potentially choppy waters ahead.
“For those looking to buy in 2025, it will be a balancing act. Mortgage rates should continue to drift down, but house prices may hold firm or even rise if demand picks up.
“Seeking professional financial and mortgage advice will be key in navigating these changes and securing the best possible deal.”
Jonathan Handford, managing director at Fine & Country:
“House prices in the UK were on the rise in January fuelled by renewed buyer confidence and shifting economic conditions.
“The first interest rate cut of 2025 has sent a clear signal to the market, which should prompt lenders to lower mortgage costs and entice hesitant buyers back into the fray.
“As borrowing becomes more affordable, competition is expected to intensify — driving demand and putting further upward pressure on prices.
“However, while lower rates improve affordability, house prices have already risen significantly over the past decade, leaving many first-time buyers still struggling to step onto the ladder.
“Market dynamics are also being shaped by the looming April stamp duty threshold reduction. December’s unexpected jump in mortgage approvals suggests this deadline is already influencing buyer behavior.
“While easing inflationary pressures have paved the way for lower interest rates, core inflation remains above target at 3.2%, limiting how quickly further cuts can be introduced.
“Policymakers face the challenge of balancing affordability with economic stability. If mortgage rates fall too sharply, demand could outstrip supply, exacerbating the UK’s long-standing housing shortage and keeping prices elevated.
“With economic forces aligning to create a more active market, 2025 is set to be a pivotal year for UK housing.
“While lower borrowing costs may improve access to homeownership, supply constraints and fiscal policy changes could keep upward pressure on prices.
“This latest rate cut may be the spark that reignites the market, but whether it leads to long-term stability remains to be seen.”
Mark Eaton, chief operating officer:
“A rebound in house prices is good news for sellers, following a dip in December, but the last thing first-time buyers need is for the bottom rung of the ladder to move even higher.
“The increase in house prices to a new record high follows a recent rise in mortgage approvals – signs that confidence is returning to the market.
“However, for hopeful buyers looking to get onto the market, house price growth is making the task of buying a home even more difficult.
“A fall in the base rate yesterday may lead to modest reductions in mortgage rates, but it is unlikely to drastically improve affordability for first-time buyers.
“Sluggish wage growth and strict mortgage regulation are making matters worse for many borrowers, who will be feeling disillusioned by the current state of the market.
“We need urgent action to restore balance and accessibility to the housing market, and create a brighter outlook for current and future homebuyers.”
Jonathan Hopper, CEO of Garrington Property Finders:
“The traditional January bounce didn’t disappoint.
“After several property portals reported record Boxing Day traffic and a surprise jump in the number of mortgages approved in December, business was brisk in much of the property market last month.
“But the eye-catching jump in prices that Halifax recorded at a national level is deceptive. Look more closely at the data and it becomes clear that accelerating price growth is far from universal – in fact it slowed in two-thirds of the UK’s nations and regions.
“The north-south divide is getting bigger as northern regions, where value is perceived as better, post some increasingly punchy numbers.
“Prices in the North East grew 5.2% in the past year, nearly twice as fast as prices rose in London.
“Even more striking is the price divide. If the mainstream market is going like a train, the prime market is going like a glacier.
“Price growth has slowed to a crawl, or is flat, in some of Britain’s most expensive and desirable locations.
“Two factors lie behind this – an abundance of homes for sale, and the intensely price-sensitive approach being taken by buyers.
“While at the bottom end of the market, some first-time buyers have been viewing in haste and offering high in order to do a deal quickly in an effort to beat next month’s Stamp Duty deadline, at the top end of the market it’s the opposite.
“With the supply of prime homes for sale outstripping demand, wealthy buyers find themselves spoilt for choice and able to negotiate hard on price.
“Yesterday’s reduction in the Bank of England Base Rate will reduce the cost of borrowing and give buyers the freedom to stretch their budget if they want, but at present price inflation is centred on northern England and Wales.
“Elsewhere, the price rises are much more modest and sellers need to price their homes carefully or risk seeing them stuck unsold on the shelf.”
Tom Brown, managing director, real estate at Ingenious:
“Today’s Halifax data shows that the resilience and appeal of the UK property sector persist. Though we have seen higher inflation and sticky borrowing rates, we welcome the BoE’s recent rate cut and what will hopefully be the start of the much needed falling rate cycle.
“There’s clearly a significant and notable shortage of housing inventory across various price brackets and locations.
“Consequently, any decline in homeowner sales is likely counterbalanced by increased demand from renters and investors. This is a trend that is not going away.
“However, it’s crucial to recognise that the situation isn’t consistent nationwide or across different property pricing brackets.
“It’s helpful to delve into subsectors and regional dynamics when assessing opportunities, as a broad market view can be misleading.
“In the real estate sector, we’re seeing significant investment capital for assets for long-term rental.
“On account of their scale and buying power, these typically institutional investors face fewer disruptions than owner occupiers or small-scale buy-to-let investors.
“At Ingenious, we continue to work closely with borrowers and investors, adapting to the dynamic market landscape and broader economic shifts, including those related to the climate crisis and changing lifestyles.
“We are expanding the reach of our development lending product to provide extended stabilisation terms for specialised developers in the rental sector. Furthermore, we’re introducing special lending terms for developers focused on reducing embedded carbon in their construction practices.”
Jason Tebb, president of OnTheMarket:
“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 withbuyers 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.”
