Annual house price growth picked up slightly at the start of 2026, according to Nationwide. Prices were 1.0% higher in January than a year earlier, up from 0.6% in December. On a monthly basis, prices rose by 0.3% after seasonal adjustment, signalling modest momentum following a softer end to 2025.
Activity in the housing market weakened towards the close of last year. Nationwide attributes much of this slowdown to uncertainty ahead of the Autumn Budget, particularly around possible changes to property taxation. Even so, underlying demand proved more resilient than headline activity suggested. Mortgage approvals for house purchases remained close to pre-pandemic levels, indicating that buyers were cautious but not retreating from the market altogether.
Affordability improved across most of the UK over the past year, supported by easing borrowing costs and stronger wage growth. Northern Ireland was the main exception, where rapid house price increases outpaced income growth, putting pressure on buyers. Elsewhere, conditions generally moved in a more favourable direction.
London saw the largest improvement in affordability for the second year running. This reflected relatively subdued house price growth, solid earnings growth and lower interest rates. Despite this progress, London remains the least affordable region overall. Regional affordability gaps are increasingly shaping who can buy. In the capital, first-time buyers typically earn around 45% more than the regional average, while in more affordable areas such as the Midlands and Scotland, buyer incomes tend to be closer to, or even below, local norms.
Looking ahead, analysts expect falling borrowing costs and continued wage growth to support confidence, although households are likely to remain cautious in the near term.
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