The start of 2026 has brought a series of positive developments. First and foremost, congratulations are in order as China’s long-anticipated “Super Embassy” plan has officially received approval. This milestone signals a further improvement in UK–China relations and is expected to encourage deeper dialogue and cooperation across multiple areas.
Looking to live near the new Chinese Embassy?
Take a closer look at the London Dock development.
Benefiting from its proximity to the new Chinese Embassy, the London Dock development demonstrates strong competitiveness across key dimensions including residential amenities, transport connectivity and access to education. The community features approximately 7.5 acres of open green space, while residents enjoy access to a private clubhouse with comprehensive facilities, including 24-hour concierge services, fitness amenities and social spaces designed to meet a wide range of lifestyle needs.
In terms of transport, the development is surrounded by five Underground stations, enabling efficient connections to major employment hubs such as the City of London and Canary Wharf, significantly enhancing commuting convenience. In addition, residents can enjoy easy access to London City Airport, catering to both daily commuting and wider regional or international travel.
With regard to education, the area is home to a number of well-regarded schools, providing strong options for primary and secondary education. Supported by the extensive transport network, the development also offers fast and convenient access to leading universities including LSE, King’s College London and UCL.
At the same time, the UK residential market has made a strong start to the year. According to the latest house price index released by Rightmove earlier this week, a combination of improved market certainty following the Autumn Budget and falling mortgage rates has driven a significant increase in asking prices. The average asking price of newly listed homes rose by 2.8% month on month, marking the largest January increase in Rightmove’s 25-year data history and reflecting a clear rebound in market activity compared with the end of last year.
In the following sections, lansha will analyse the market from multiple perspectives, including price trends, supply and demand dynamics, mortgage conditions and regional performance.
Record January Increase, Annual Growth Turns Positive
In January 2026, the average asking price of residential property across the UK rose to £368,031, an increase of £9,893 compared with December 2025, representing a monthly rise of 2.8%. This not only marks the largest January increase on record, but also the highest monthly increase across all months since June 2015.
After a period of modest growth throughout most of 2025, the easing of uncertainty following the Budget has helped drive a price rebound. Average prices are now 0.5% higher than a year earlier, returning the market to positive annual growth and broadly recovering to levels seen before Budget speculation emerged in August 2025.
Price performance varies by buyer segment. Properties typically aimed at first-time buyers recorded an average asking price of £225,000, up 1.6% month on month. Homes for second-step and home-mover buyers averaged £341,000, representing a 2.0% monthly increase. At the upper end of the market, average asking prices reached £658,000, rising by 2.6% over the month. Despite the overall upward movement in prices, the market remains relatively rational. Around one-third of homes currently for sale have already seen a reduction in asking price, and with housing stock at its highest level for this time of year since 2014, Rightmove advises sellers to strike a realistic balance between pricing expectations and current market conditions.
Buyer and Seller Activity Rebounds After Christmas
The combination of greater policy certainty following the Budget and the seasonal uplift typically seen at the start of the year has driven a noticeable increase in market activity. Data shows that in the two weeks following Christmas, buyer enquiries surged by 57% compared with the two weeks prior, while the number of newly listed properties jumped by 81%. Rightmove also recorded its busiest ever Boxing Day in terms of website traffic, signalling a rapid return of both buyers and sellers to the market. Although buyer demand in the most recent week remains below the elevated levels seen at the start of 2025, when activity was boosted by stamp duty changes, it is broadly in line with the same period in 2024, indicating a stable and sustainable recovery.
Looking at transaction timelines, the average time taken to find a buyer has lengthened across the UK. In December, the national average rose to 70 days, while in London it reached 78 days. This reflects a more balanced market environment in which buyers benefit from increased choice due to higher levels of available stock. London-based agents report particularly strong demand from home-movers early in the year, with many households choosing to act ahead of the traditional spring selling season. Properties offering access to good school catchments and modern layouts such as open-plan kitchens and living areas are proving especially attractive, giving such homes a competitive edge in the current market.
Mortgage Rates Fall to Near Three-Year Lows, Affordability Improves
The continued decline in mortgage rates has become a key factor supporting the market recovery. The average two-year fixed mortgage rate in the UK has now fallen to 4.26%, while buyers with larger deposits can access two-year fixed rates as low as 3.45%. Based on the UK’s average asking price and a 20% deposit, monthly mortgage repayments are now more than £100 lower than they were a year ago.
Lower borrowing costs have materially improved affordability. Data indicates that with average wage growth now outpacing house price growth, combined with reduced mortgage costs, financial pressure on first-time buyers has eased to some extent. However, affordability challenges remain in certain areas. For single-income households, even borrowing at 4.5 times annual salary may still fall short of covering the cost of entry-level homes in some regions, whereas dual-income households are generally better positioned. Mortgage experts suggest that interest rates are likely to remain broadly stable in the near term, with the Bank of England expected to hold the base rate steady in February. As a result, mortgage rates may see only limited movement in the coming months, making the current period a potentially favourable window for buyers looking to secure competitive rates.
Regional Price Performance Shows Clear Divergence
In January 2026, house price trends across the UK showed clear regional divergence. Most regions recorded monthly price growth, with only the East Midlands and Scotland seeing declines. The strongest performance was observed in the North, where prices rose by 7.0% month on month and 3.4% year on year, with an average price of £197,000. Strong value for money continues to attract both investors and owner-occupiers. The East of England and the South East recorded monthly increases of 3.0% and 2.8% respectively. In London, prices rose by 0.9% month on month and 0.9% year on year, with the average price approaching £680,000.
Within London, price movements varied significantly by borough. Westminster recorded a 3.4% monthly increase in January, Haringey rose by 2.4%, and Havering posted the strongest annual growth at 4.3%. By contrast, boroughs such as Camden, Richmond and Islington experienced more notable monthly declines, with Camden recording a year-on-year fall of 4.9%, making it one of the weaker performers.
This divergence reflects differences in supply and demand dynamics, local amenities and pricing structures across London, with prime central areas and certain outer boroughs following distinct market trajectories.
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Founded in 2014 and headquartered in Paddington, London, Lansha Group has become one of the top 100 seafarers in the industry in the past 10 years, providing one-stop services for international property. We have many years of professional experience in dealing with all aspects of the property market, from choosing a property to opening a home, loans, solicitors, tenancy management and second-hand property sales. We provide 24-hour real-time service to our global clients, assisting them in dealing with the cumbersome formalities of property purchase and home inspection, so that they can move into their homes or invest in them with peace of mind. If you are looking to invest in the UK, Lansha Group has a professional investment team to assist you in selecting the best properties, analysing the housing information and regional development, and making a comprehensive assessment to choose the ideal home. Visit Lansha Group's website now to view our selection of properties and choose your dream home!
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