Average UK house prices saw a 4.9% increase over the 12 months to January 2025, reaching £269,000. This marks a rise from the 4.6% annual growth recorded in the 12 months to December 2024.

According to the latest figures from the Office for National Statistics (ONS), average house prices rose to £291,000 (4.8%) in England, £210,000 (6.0%) in Wales, and £187,000 (4.6%) in Scotland over the same period.

The North East recorded the highest house price inflation among English regions, with prices rising by 9.1% in the 12 months to January 2025, up from 6.9% in December 2024.

London experienced the lowest annual house price inflation, at 2.3% in the 12 months to January 2025, although this was an increase from 0.4% in the previous 12 months.

Amy Reynolds, Head of Sales at Antony Roberts estate agency, commented: “The housing market is in a holding pattern. Without another interest rate cut or intervention by the Chancellor in her Spring Statement, transaction levels are unlikely to change. The market remains sluggish, with prices holding up due to a lack of stock.”

Mark Harris, Chief Executive of SPF Private Clients, stated: “With inflation dipping to 2.8 per cent, this is encouraging news as far as future interest rate movements are concerned, and if this downwards trend continues, it will make it easier for the Bank of England to cut rates again sooner rather than later.”

He also expressed: “Another rate reduction would help boost the housing market and wider economy and would be particularly timely with the stamp duty concession coming to an end this month.”

Richard Harrison, Head of Mortgages at Atom Bank, highlighted: “The increase reported by the ONS – the highest rate of annual growth since February 2023 – is a great snapshot of the start of this year, with buyers moving quickly out of the blocks in the race to beat the upcoming Stamp Duty deadline.”

He pointed to Rightmove data showing that the number of agreed deals was up by 9% compared to the same period last year. Even if demand drops after the stamp duty deadline passes, he argued that the persistent lack of supply would likely prevent any significant price declines in the coming months.

He added: “Cheaper mortgage rates are playing their part, too. Moneyfacts reported significant momentum in rate falls across February, with two and five-year fixes dropping at the fastest pace in six months. With inflation coming in lower than expected, and the markets now predicting there will be two further base rate cuts this year – potentially from as soon as May – the prospect of mortgage rates heading below 4% will buoy buyers.”

Source: Mortgage Strategy, David Burrows