What's happened
UK house prices saw their largest January increase in 25 years, rising by nearly £10,000 in five weeks, driven by market optimism after tax and interest rate developments. However, regional variations and high supply levels suggest caution for buyers and sellers alike.
What's behind the headline?
The recent surge in UK house prices signals a cautious recovery driven by policy clarity and falling mortgage rates. The 2.8% rise in asking prices marks the largest January increase in a decade, reflecting renewed seller confidence. However, this optimism is tempered by high regional supply, with some areas like the East Midlands and Scotland experiencing price declines. The divergence between asking and selling prices, along with a record-high number of homes for sale, indicates a market balancing between renewed demand and persistent supply. The broader economic context, including improved business confidence and easing monetary policy, supports a gradual price rebound, but regional disparities and high inventory levels suggest that the recovery will be uneven and cautious. The outlook for 2026 remains cautiously optimistic, with prices expected to rise modestly as market confidence solidifies and mortgage conditions remain favorable.
What the papers say
The Guardian reports the largest January house price increase in 25 years, driven by renewed optimism after tax and interest rate developments. Reuters highlights the positive shift in seller confidence following the delayed tax hikes and interest rate cuts, with asking prices returning to summer 2025 levels. The Independent emphasizes the regional variations, noting that prices in London and the South East remain subdued, while other regions see price rises. Meanwhile, industry experts from Knight Frank and Garrington suggest that market stability will likely lead to modest growth, supported by falling mortgage rates and increased buyer activity. Contrastingly, the Halifax index shows only a slight annual increase of 0.3%, indicating that the overall market remains subdued despite regional rebounds.
How we got here
The UK housing market experienced a slowdown in late 2025 due to political uncertainty and speculation about tax hikes, which dampened buyer confidence. Interest rate cuts and delayed tax increases in January 2026 have since revived market activity, with asking prices climbing and buyer demand returning, especially in regions like the east of England.
Go deeper
Common question
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Why Are UK House Prices Rising So Fast Now?
The UK housing market has experienced a surprising surge in prices, with the largest January increase in 25 years. Many wonder what’s driving this rapid growth and whether it’s sustainable. In this page, we explore the key factors behind the current market rebound, regional variations, and what buyers and sellers should keep in mind during this period of change.
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