Annual UK house price growth rose to 1% in January, with property and mortgage experts saying “this is a positive start to 2026”.
In January itself, prices rose 0.3%, according to the latest Nationwide House Price Index (HPI).
In December, by contrast, prices fell by 0.4%.
All parts of the UK, with the exception of Northern Ireland, saw an improvement in affordability over the past year, Nationwide said.
For the second year running, London saw the largest improvement in affordability, reflecting relatively weak house price growth in 2025, solid earnings growth and lower interest rates. Though the capital remains the least affordable region by a significant margin.
London stands out as the area with the greatest divergence, with actual first-time buyer earnings around 45% higher than average incomes in the capital.
But in regions where affordability is less stretched, such as the Midlands, actual first-time buyer earnings tend to be much closer to regional averages.
In a few areas, most notably Scotland, the incomes of actual first-time buyers are below the average income in the region, indicating relatively healthy housing affordability.
Robert Gardner, Nationwide’s Chief Economist, said: “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. Prices increased by 0.3% month on month in January, after taking account of seasonal effects.
“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 is maintained.”
Emma Jones, Managing Director at Runcorn-based Whenthebanksaysno.co.uk, said she was seeing evidence the market had a strong start to 2026.
She added: “The property market shot out of the blocks in January. Affordability is the oil of the housing market and a combination of slower house price growth last year and falling mortgage rates means it continues to improve for many. All in all, this is a positive start to 2026 and we had a busy month with demand strong.”
Babek Ismayil, CEO at homebuying platform OneDome, said the Budget in November had led to pent-up demand in the market as buyers held off to see what was going to happen.
He continued: “The late November Budget almost certainly played a part in this data, as activity levels were subdued in the run-up to last year’s big fiscal event and then we were straight into Christmas. January saw a lot of pent-up demand unleashed onto the property market.
“The Nationwide is correct when it says affordability will be key to the performance of the property market in 2026, although clearly there are sharp regional differences on that front. Luckily we continue to see lender innovation and that bodes well for the year ahead.”
Omer Mehmet, Managing Director at Welling-based Trinity Finance, said it was a “promising start” to the year.
He added: “It’s too early to say the housing market will be set up for a barnstorming 2026 but this is a promising start.
“First-time buyer activity edging up over the past year is critical, as that enables the rest of the property ladder to function. All eyes now turn to the Bank of England this week and above all whether we get more rate cuts in the first half of the year.”
Justin Moy, Managing Director at Chelmsford-based EHF Mortgages, said improved mortgage affordability has helped.
He continued: “There has been an uptick in activity post-Christmas as buyers wake up from their Budget fatigue and push on with their plans to move. Improved mortgage affordability has certainly helped some of our clients borrow more to buy larger properties, avoiding troublesome leasehold flats on the property ladder.
“As rates have plateaued for a while, the next few months will be critical for the 2026 market. Early momentum will lose its fizz if there is any doubt about future property values.”
