House prices increased by 0.7% in January, following a 0.5% fall in December, with annual growth at 1%, according to the latest Halifax house price index.
As a result, the average property price is now £300,077, rising above £300,000 for the first time.
Despite the rise, growth in recent years has been relatively modest, following the sharp increases seen during the pandemic.
Over the past three years, property prices have risen by 5.7%, or around £16,000, as higher interest rates and stretched affordability have kept growth muted.
By contrast, the three years from 2020 to 2023 saw prices climb nearly 19% (over £44,000), driven by ultra low borrowing costs and the ‘race for space’.
Regional differences become more pronounced
Regional differences in house price performance have become more pronounced, with a clear divide between the northern and southern parts of the UK.
In the north, positive momentum has carried over from last year, with demand and inflation remaining robust.
Northern Ireland continues to lead the UK, with average prices rising 5.9% annually to £217,206. Scotland follows closely, recording annual growth of 5.4%, taking the average property price to £221,711.
Elsewhere, Wales saw a modest rise of 0.5% over the year, with the average home now costing £228,415.
Within England, the strongest growth remains concentrated in the north. The North West saw prices increase 2.1% to £244,329, while the North East recorded 1.2% annual growth, bringing the typical price to £181,198.
In contrast, southern regions have seen prices soften. The South East, South West, London and Eastern England all saw annual declines of more than 1%.
As the four most expensive areas of the country, these markets tend to be more sensitive to higher borrowing costs and taxes, which can weigh on affordability and confidence.
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.”
Nicholas Finn, managing director of Garrington Property Finders, commented: “This feels very much like a return to business as usual.
“January’s 0.7% surge in prices more than cancelled out the 0.5% dip seen in December, and Halifax’s data is the clearest indication yet that the property market is regaining the momentum it lost at the end of 2025.
“That said, for now the momentum is more about activity than rising prices. Many estate agents were very busy in January as thousands of would-be buyers who put their househunting on pause last year returned to the market.
“Deals are being done and we will see this feed into the numbers of transactions, but pricing remains very competitive in Wales and much of southern England.
“Halifax’s data shows that average prices fell by more than 1% in all four of the most expensive English regions over the past year. With a surfeit of supply even in some highly desirable areas, buyers are still dictating the tempo on prices.
“With mortgage rates falling in January and set to fall even further in coming months as the Bank of England sounds increasingly dovish, borrowing costs are becoming less of a barrier to aspiring buyers.
“Coupled with the sense that a year of flat or even falling prices has made homes better value, this is providing a powerful spur to demand. Discretionary buyers, who are especially sensitive to mortgage costs, are returning to the top of the market.
“And many renters who put off plans to buy their first home amid the uncertainty of last year are asking themselves ‘if not now, then when?’
“It’s early days, but this is an encouraging start to the year and we could be on track for a strong spring as demand accelerates.”
Nicky Stevenson, managing director at Fine & Country, added: “Today is a significant milestone for the housing market, with the average UK house price rising above £300,000 for the first time. While this is a symbolic moment rather than a sudden shift, it underlines how values have continued to hold up despite the economic pressures households have faced over the past couple of years.
“This uplift at the start of the year reflects a return of momentum after a quieter end to 2025. January often benefits from renewed interest from buyers, and that is feeding through into house prices.
"Affordability remains front of mind, but the picture is gradually improving. Wage growth has helped ease some pressure, inflation is expected to moderate over time, and mortgage rates have stabilised compared with their recent highs. Together, these factors are giving buyers more confidence to move forward with plans that may have been paused last year.
“There are still clear regional differences, with some parts of the country performing more strongly than others. That reinforces the importance of understanding local market conditions, as demand and pricing can vary widely depending on location and property type.
“Looking ahead, passing the £300,000 mark should be seen as a reflection of long-term market resilience rather than a sign of runaway growth. While interest rates have held firm this month, borrowing costs are expected to continue easing, and we expect steady momentum to take shape as we move into spring.”
