House prices hit record high in January

The Halifax House Price Index for January 2025 shows House prices bounced back in January, up +0.7% on a monthly basis versus the -0.2% fall seen in December 2024.

On an annual basis, property prices were 3% up versus this time last year.

The new average house price of £299,138 marks a record high.

Amanda Bryden, Head of Mortgages, Halifax, said, “The UK housing market started the year on a positive note, with average prices rising by +0.7% in January, more than recovering the slight dip of -0.2% in December. This increase pushed the average property price to a new record high of £299,138. However, annual growth slowed to +3.0%, the slowest rate since last July.

“Affordability is still a challenge for many would-be buyers, but the market’s resilience is noteworthy. There’s strong demand for new mortgages and growth in lending. With a stamp duty increase looming, some of this demand may have come from first-time buyers eager to complete transactions before the end of March.

“Despite geopolitical uncertainties, and waning consumer confidence, other key indicators look fairly positive for the housing market.

“The Bank of England has made its first base rate cut of the year, and there are probably more to come. Household earnings are expected to continue outpacing inflation – albeit that gap may narrow – easing some of the financial pressure still being felt from the cost-of-living squeeze.

“As things stand, mortgage rates are likely to hover between 4% and 5% in 2025, influenced by both global financial markets and domestic monetary policy. Over the past year, buyers have been getting used to this new normal, understanding that rates are unlikely to return to the historical lows of 1%.

“But the fundamental issue in the housing market remains the lack of supply. This long-term trend, coupled with a gradual improvement in affordability, should support further modest house price growth this year.”

Guy Gittins, CEO of Foxtons, said, “The UK property market has certainly picked up where it left off last year, as the increasing momentum seen across the sales market throughout 2024 has continued to flow into the new year, further cultivating the rate of house price growth seen across the market and pushing the average house price to a record high.

This has been driven by a degree of added urgency from first-time buyers keen to complete ahead of April’s stamp duty deadline, as well as a greater degree of acceptance from homebuyers of the adjustment to interest rates over time.

Market activity remains robust and it’s clear that the nation’s buyers and sellers are hitting the ground running this year. In fact, we’ve seen buyer enquiries and viewings numbers remaining consistent with the latter stages of last year.

All signs currently point to a prosperous year ahead with respect to property values and those considering a sale in 2025 should be looking to list their home on the market sooner, rather than later.”