UK house prices increased by 1.0% annually in January 2026, up from 0.6% in December, according to Nationwide Building Society’s latest House Price Index. Monthly prices rose 0.3% after seasonal adjustments.
The data shows the housing market recovering from a slowdown at the end of 2025, when activity dipped due to uncertainty ahead of the Budget. Mortgage approvals for house purchases remained close to pre-pandemic levels despite the temporary decline.
Affordability trends support demand
Nationwide reported that affordability has improved over the past year as earnings growth outpaced house price increases and mortgage rates declined. First-time buyers have increased as a proportion of total purchases, benefiting from these conditions.
London recorded the largest affordability improvement for the second consecutive year, though it remains the least affordable region in the UK.
Robert Gardner, Nationwide’s Chief Economist, stated: “The start of 2026 saw a slight pick-up in annual house price growth, which rose to 1.0% in January, after slowing to 0.6% in December. Housing market activity also dipped at the end of 2025, most likely reflecting uncertainty around potential property tax changes ahead of the Budget.”
Gardner added: “Housing market activity is likely to recover in the coming quarters, especially if the improving affordability trend seen last year is maintained.”
Market commentary
Industry professionals offered varied assessments of the data. Verona Frankish, CEO of Yopa, said buyers and sellers are engaging with greater confidence following the seasonal December slowdown.
Amy Reynolds, Head of Sales at Antony Roberts, noted that transactions are improving and values remain resilient where properties are realistically priced, with more purposeful buyers emerging compared to autumn 2025.
Tom Bill, Head of UK Residential Research at Knight Frank, provided a more cautious view, noting that mortgage approvals in December were 9% below the five-year average, indicating demand remains fragile despite the price increase.
Mark Harris, Chief Executive of SPF Private Clients, highlighted that several major lenders reduced mortgage rates in January, with first-time buyers returning due to lower rates at higher loan-to-value ratios.
Market outlook
Nathan Emerson, CEO of Propertymark, said the organisation has witnessed growing consumer confidence over the past twelve months, more competitive mortgage deals, and an increase in properties listed for sale.
The January figures suggest the housing market is stabilising after Budget-related uncertainty, though mortgage approval data indicates recovery may be gradual. The continuation of improved affordability conditions will be critical to sustaining momentum through 2026.
