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UK house prices ticked higher in January, partially reversing the December fall that was triggered by uncertainty around potential changes to property taxes in the autumn Budget.
House prices rose 0.3 per cent month on month in January, according to lender Nationwide, after a 0.4 per cent fall registered in the previous month. Compared with the same month last year, house prices were up 1 per cent in January to an average of £270,873.
The monthly increase was in line with analysts’ expectations.
Robert Gardner, chief economist at Nationwide, said that housing market activity dipped at the end of 2025, “most likely reflecting uncertainty around potential property tax changes ahead of the Budget”.
However, he added that “housing market activity is likely to recover in the coming quarters, especially if the improving affordability trend seen last year is maintained”.
Nationwide highlighted how earnings growth outpaced house price growth and a steady decline in mortgage rates helped buyers’ demand last year, leading to an increase in the share of first-time buyers to more than half of the market, according to the lender.
The figures provide a more muted picture for house prices than January’s jump in asking prices published last month by Rightmove.
The smaller rebound than the December fall in the Nationwide index “may reflect evidence that the supply of homes on the market is currently at its highest since the pandemic, which is probably dampening prices somewhat”, said Alex Kerr, economist at Capital Economics.
He expects that despite the recent increase in the supply of homes on the market, the combination of looser lending standards, further falls in mortgage rates and decent wage growth will allow house prices to rise by 3.5 per cent in the year to Q4 2026.
Speculation about potential far-reaching property tax rises in the Budget, such as an overhaul of stamp duty charges, circulated from August. Chancellor Rachel Reeves went on to announce a “mansion tax” surcharge on properties worth more than £2mn, but it is not due to kick in until April 2028.
Figures published by the Bank of England last week showed that mortgage approvals for house purchases fell by 3,100 to 61,000 in December.