House price growth bounces back in January with 1% rise: Nationwide

The start of 2026 saw a pick-up in annual house price growth, which rose to 1.0% in January, after slowing to 0.6% in December, the latest Nationwide house price index shows. 

Prices increased by 0.3% month-on-month in January, after taking account of seasonal effects.

A recent report by Nationwide found that affordability constraints have eased over the past year, thanks to earnings growth outpacing house price growth and also a steady decline in mortgage rates. This has helped underpin buyer demand, with first-time buyer activity over the last year continuing to edge higher as a share of house purchases.

The analysis shows that a prospective buyer earning the average UK income and buying a typical first-time buyer property with a 20% deposit would have a monthly mortgage payment equivalent to 32% of their take-home pay – slightly above the long-run average of 30% but well below the recent high of 38% recorded in 2023.

Robert Gardner, Nationwide's chief economist, said: “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."

Nicky Stevenson, managing director at Fine & Country, commented: "A modest rise in house prices last month is a reassuring start to the year for both buyers and sellers.

“The winter months tend to be quieter, so this uptick suggests there’s still firm interest in property, with buyers active where value and presentation align. The early part of the year can often be a release of pent-up demand from the end of last year, and this result fits that pattern.

“Affordability remains a key factor shaping the market, but we’re starting to see it ease slightly as mortgage rates stabilise and Brits look at cutting back on household spending. 

“That easing in pressure, paired with a good supply of homes on the market, means buyers have more choice than they’ve had in recent years, and that is helping underpin price growth, even if it’s modest.

“This latest set of figures shows the value of getting the basics right. Sellers who are realistic from day one are seeing much stronger traction, and we’re seeing homes that are priced correctly and marketed properly generate interest quickly.

“Nationwide’s broader outlook suggests house prices may grow in the 2% to 4% range in 2026, if affordability continues to improve and borrowing costs ease further, and we are likely to agree with that analysis. This kind of gradual, sustainable growth is exactly what many buyers and sellers have been looking for as we enter a new year.

“As confidence in the market strengthens, we expect this momentum to carry through into spring. For sellers, now is a good time to ensure properties are presented and priced to reflect local market conditions, as we tend to see an influx in viewings as the weather improves and nights become lighter.”

Nicholas Finn, managing director of Garrington Property Finders, added: “Keeping active and making gains - so far the property market has stuck to its New Year’s resolutions.
 
“After ending 2025 with a whimper and not a bang, the market began 2026 in a flurry of activity as the thousands of would-be buyers who pressed pause ahead of the Budget returned to the market.
 
“Estate agents suddenly became busy and Nationwide’s data shows that December’s 0.4% fall in average prices snapped back to 0.3% growth last month.
 
“The uptick in buyer sentiment is being driven by a couple of factors. In part it’s the uncorking of demand that many people kept bottled up during an uncertain 2025.
 
“But it’s also the sense that the abundance of supply, coupled with the fact that many areas in the south saw prices soften last year, has made this an attractive time to buy. Homes have become more affordable and buyers are spoilt for choice.
 
“Nationwide’s data suggests affordability has improved fastest in London. Some of the capital’s most desirable postcodes saw prices fall sharply in 2025, and with interest rates back below 4%, borrowing costs have come down significantly.
 
“Even small shifts in mortgage rates bring discretionary buyers back to the market and we’re starting to see that in London now.
 
“Buyer confidence and activity typically improve before you see it feed through into headline price growth, and this is where we are in the cycle right now - improving transactions rather than a surge in values.
 
“It’s early days but this is a solid start to the year and we could be on track for a strong spring and rising market in 2026.”