As January 2026 ends, the UK residential market has shaken off uncertainty and started the year with strong momentum. Latest data from two major institutions confirms a gradual recovery. Today, lansha reviews Halifax and Nationwide figures to analyze the housing outlook for the coming months.
Halifax reported that the average UK house price in January surpassed the £300,000 milestone, reaching £300,077, up 0.7% month-on-month and 1% year-on-year, marking four consecutive months of monthly growth.
Nationwide data also showed a reversal of December’s decline. The encouraging figures reflect a return of buyer confidence and highlight the resilience of the UK housing market.
The recovery is supported primarily by improving affordability. Since late 2022, wage growth has outpaced house price increases, while mortgage rates have gradually eased, reducing financial pressure on buyers.
According to Nationwide, for an average-income first-time buyer purchasing a typical property with a 20% deposit, monthly mortgage payments now account for about 32% of net income. Although slightly above the long-term average, it is a clear improvement from 38% in 2023, with London affordability improving for two consecutive years.
Liquidity in the housing market also remains healthy. Approved mortgage volumes are close to pre-pandemic 2020 levels. Lenders are competing more actively, expanding mortgage products and improving financing options for second-time buyers, effectively lowering entry barriers.
Moreover, Halifax price data is based on approved mortgage transactions, suggesting that price growth is supported by real demand and lending activity rather than inflated asking prices. Buyers are shifting from opportunistic bargain-hunters to rational asset allocators. Even in the seasonal slow month of January, the market posted strong performance, indicating potentially higher activity in the spring market.
However, uncertainties remain. The Bank of England base rate currently stands at 3.75%. If inflation continues to fall, the market expects rates to move toward a neutral range of 3.0%–3.5%.
On the fiscal side, the upcoming Spring Budget in March may bring supportive measures, including a potential long-term extension of first-time buyer stamp duty relief and targeted lending support for energy-efficient new homes. If implemented, these could reduce transaction costs and stimulate housing chains.
Supply constraints remain notable. Although national housing registrations rose in 2025, London registrations fell by 27%, suggesting a potential delivery shortage over the next two years.
Summary by lansha
Overall, Halifax forecasts a modest 1%–3% price growth in 2026. Returning confidence, improved affordability, and supportive policy expectations form the key pillars, while regional divergence and supply constraints continue to shape the market.
For homebuyers, current rates and activity levels offer a reasonable entry window; for investors, the long-term value of properties in core locations remains noteworthy. With the Spring Budget and rate outlook becoming clearer, the UK housing market is expected to move steadily toward supply-demand balance.
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