Annual house price growth slowed to 1.3% in the year to January 2026, new figures released by the Office for National Statistics (ONS) have shown.

The latest figure was down from 1.9% which the ONS reported for the year to December, taking the average price of a UK home to £268,000 in January.

Across the home nations, the average house price in England was £290,000 in January, up 1.1% (£3,000) from the same month last year. In Wales, the average house price was £210,000, up annually by 2% (£4,000), while in Scotland, the average house price was £188,000, up 1.3% (£3,000) from last year.

According to the latest data, the average house price for Northern Ireland was £196,000 in Q4 at the end of 2025, up 7.5% (£14,000) corresponding period in 2024.

Mortgage expert at Quilter, Karen Noye, noted that the latest ONS data predates the sharp repricing in mortgage markets triggered by the outbreak of the war in the Middle East.

“January’s dataset captures a period shaped by falling inflation expectations and gradually improving affordability, not the jump seen in funding costs since the start of the war, that has pushed mortgage rates higher and weighed on buyer confidence,” Noye said.

“The headline figures therefore provide a backward looking snapshot of a market that has already shifted materially.

“As rate volatility feeds through to mortgage offers and stress tests, the pressure on already stretched first time buyers is likely to intensify. At the same time, if inflation begins to rise again while wage growth fails to keep pace, household savings will be squeezed for a second time. That combination risks eroding the slight affordability gains seen earlier in the winter and could further dampen demand.

“The modest annual gains recorded in January tell us very little about the trajectory from here. The sharper reality will only begin to show up in the data once the next releases capture the immediate impact of higher borrowing costs, weaker sentiment and tighter household budgets.”

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