UK property prices have recorded their largest January increase on record, with new data pointing to a rebound in market sentiment at the start of the year. Furthermore, new listings have surged in price at a pace not seen for over a decade. However, behind the headline price rises, there remains some challenges for sellers…
Largest January rise on record
The average price of residential property coming to the market in January rose by 2.8 per cent, or £9,893, taking the national average to £368,031. This is the biggest January rise ever recorded and the largest month-on-month increase since June 2015. National average UK property prices are now 0.5 per cent higher than at the same point last year.
Prices have recovered to levels close to those seen in August 2025, before market confidence was affected by uncertainty surrounding the November Budget. While most regions saw prices rise in January, the East Midlands and Scotland recorded monthly falls.
High supply keeps pressure on sellers
Despite the rise in UK property prices, sellers continue to face strong competition. The number of residential properties available for sale is at its highest level for this time of year since 2014. Around a third of properties already on the market have had their asking price reduced.
Colleen Babcock, property expert at Rightmove, which compiled the data for its House Price Index, said: “It’s an encouraging start to the year to see sellers confident enough to list their homes at higher prices after several months of muted price growth last year, coinciding with more potential buyers returning to market. However, asking prices are only back to where they were in the summer of 2025 before the Budget rumours began surfacing, which unsettled the market and dented confidence. This new year, seller confidence is a good sign, but sellers would do well to listen to the guidance of their agent when setting their asking price and avoid being over-optimistic. There’s a twelve-year high number of homes for sale for this time of year, so buyers have lots of choice, and a third of properties that were already on the market for sale have had a price reduction. This means that sellers need to be realistic and balance the price they want to achieve with the likelihood of being able to find a buyer in their local market at that price.”
Buyer activity rebounds after Christmas
Market activity has also picked up since Christmas. In the two weeks after Christmas Day, buyer demand rose by 57 per cent compared with the two weeks before, measured by the number of people contacting agents to enquire about property for sale. Over the same period, the number of newly listed residential properties rose by 81 per cent.
Mortgage rates continue to ease
Mortgage rates have continued to ease. The average two-year fixed mortgage rate now stands at 4.29 per cent, compared with 5.03 per cent a year ago, and is at its lowest level since before the September 2022 mini-Budget. The cheapest available two-year rate for buyers with larger deposits is 3.47 per cent.
Babcock added: “It’s early days but there are encouraging signs that more home-movers are now planning a 2026 move as we head towards the important Spring buying and selling season. Many buyers have seen their affordability improve with average wage rises outstripping average property prices. Mortgage rate cuts at the end of 2025 and beginning of 2026 will also support those who are looking to move and come as some very good news at the start of the year, with a typical home-mover seeing their affordability improved by around £100 a month.”
Matt Smith, mortgage expert at Rightmove, said: “The financial markets are currently expecting no more rate cuts until the second quarter of the year, with the Bank of England Base Rate likely to be held during the next rate decision in February. Mortgage rates are therefore likely to be steady for the next few months, with only minor changes up or down. Those who have been waiting for cheaper mortgage rates before acting might currently be seeing some of the best deals that will be around for a while.”
The data is taken from the latest House Price Index published by Rightmove, which tracks asking prices of residential property newly listed for sale across Great Britain.
