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House price growth edges higher in January

ended 02. February 2026

Nationwide HPI is out. Views ASAP please. Park the shreddies and start writing.

January saw a slight rise in annual house price growth to 1.0%, while house prices were up 0.3% month on month, according to the latest Nationwide house price index. In December, by contrast, prices fell by 0.4%. 

Commenting on the figures, 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 (and explored further below) is maintained.

Our recent special report highlighted 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.

“Our main affordability benchmark 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% and well below the recent high of 38% recorded in 2023 (as shown in the chart below).

“All parts of the UK, with the exception of Northern Ireland, saw an improvement in affordability over the past year. Northern Ireland experienced a deterioration due to strong house price growth over the past year, with mortgage payments now above the long-run average in the region.

“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. Nevertheless, the capital remains the least affordable region by a significant margin (see chart above).

“Affordability pressures remain pronounced in the South of England, whilst in the North, Yorkshire & The Humber and Scotland, mortgage payments as a share of take-home pay are slightly below their long-run average.

“These regional variations in affordability have led to some stark differences emerging between those who would like to buy and those that can do so.

“To explore this further, we looked at how the mean earnings for actual first-time buyers compared to the regional average incomes used in our affordability benchmarks.

“London stands out as the area with the greatest divergence, with actual first-time buyer earnings (for a single borrower) 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. Moreover, 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.”

4 responses from the Newspage community

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Editor
Emma Jones
Managing Director at Whenthebanksaysno.co.uk
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. It's still a challenge in areas that have seen historically strong house price growth, such as London and the South East, but overall things are improving. All in all, this is a positive start to 2026.
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Babek Ismayil
CEO at homebuying platform OneDome
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.
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Justin Moy
Managing Director at EHF Mortgages
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.
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Omer Mehmet
Managing Director at Trinity Finance
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.