House prices grew by 1% annually in January 2026, having only increased by 0.6% in December 2025, according to Nationwide.

House prices were up 0.3% month on month, with the average house price now £270,873.

Robert Gardner, Nationwide's Chief Economist, said: “The start of 2026 saw a slight pick-up in annual house price growth.

“Housing market activity also dipped at the end of 2025, most likely reflecting uncertainty around potential property tax changes ahead of the Budget. Nevertheless, the number of mortgages approved for house purchase remained close to the levels prevailing before the pandemic.

“Housing market activity is likely to recover in the coming quarters, especially if the improving affordability trend seen last year (and explored further below) is maintained.”

All parts of the UK, with the exception of Northern Ireland, saw an improvement in affordability over the past year, with London seeing the largest improvement in affordability for the second year running, reflecting relatively weak house price growth in 2025, solid earnings growth and lower interest rates. Nevertheless, the capital remains the least affordable region by a significant margin.

Louise Apollonio, Sales and Distribution Director for Retail Mortgages at Shawbrook, said: “After a slowdown at the end of 2025, house prices have edged upwards in 2026, proving just how strong demand is amongst homebuyers. This has likely been helped by interest rates coming down to 3.75% at the end of December, prompting buyers and sellers alike to make their property dreams a reality in the new year. 

“Looking ahead, market activity is expected to continue on a steady incline, especially in light of the recent wage growth figures, which showed a year-on-year increase.”