UK House Price Growth Decelerates to 2.4% Amid Affordability Pressures
Annual house price growth across the United Kingdom slowed to 2.4% in the year to December 2025, according to the latest official data from the Office for National Statistics (ONS). This represents a moderation from the 2.8% annual increase recorded in November, highlighting a cooling trend in the property market as affordability constraints and cautious buyer sentiment take hold.
Regional Divergence in Property Values
The typical UK home was valued at £270,000 in December 2025. However, significant regional disparities persist. In England, average prices reached £292,000, reflecting a modest annual growth of 1.7%. Wales saw a stronger increase of 5%, with average prices climbing to £215,000, while Scotland experienced a 4.9% rise to £191,000.
Northern Ireland emerged as the standout performer, with average house prices surging to £196,000 in the fourth quarter of 2025, marking the strongest growth across the UK at 7.5% year on year.
Within England, the North East recorded the highest rate of house price inflation at 4.6%, although this was notably slower than the 7.5% increase observed in the year to November. London continued to lag behind the rest of the country, with average property values falling by 1% over the year to December, compared with a 0.7% decline the previous month.
Industry Insights on Market Dynamics
Nathan Emerson, chief executive of Propertymark, commented that the decelerating pace of growth reflects ongoing affordability pressures and a cautious approach from buyers. “A slowing in the annual growth of house prices signals ongoing affordability pressures and cautious buyer sentiment,” he stated. “While modest price adjustments may improve access for some purchasers, reduced activity can dampen overall market confidence. Ensuring a supportive lending environment and increasing housing supply will be critical to maintaining stability.”
The ONS data coincided with new inflation figures showing Consumer Prices Index (CPI) inflation eased to 3% in January 2026, down from 3.4% in December. Hina Bhudia, partner at Knight Frank Finance, noted that the combination of softer inflation and weak labour market data increases the likelihood of two interest rate cuts this year.
“We think this week’s figures will pave the way for fixed rates to ease further in the coming month, leading up to the next interest rate decision on March 19,” she explained. “Any falls will be incremental, but they will have a meaningful impact on sentiment. Supply is high, and buyers have plenty of choice, which could tee up a busy spring in the housing market.”
Jason Tebb, president of OnTheMarket, attributed London’s price decline to a mix of higher supply, weaker demand, and stretched affordability in the capital. “With inflation slowing to 3% and moving closer to the Bank of England’s 2% target, this should enable further base rate reductions,” he said, adding that recent cuts have already improved affordability and boosted market confidence.
Iain McKenzie, chief executive of The Guild of Property Professionals, highlighted that easing inflation and competition among lenders are helping to push mortgage rates down, improving affordability, particularly for buyers with larger deposits. “With around 1.8 million households due to remortgage in 2026, a downward rate trajectory will be welcome relief and should help sustain market confidence,” he remarked.
Rental Market Shows Signs of Cooling
In a parallel development, the ONS reported that average UK private rents rose by 3.5% in the year to January 2026, reaching £1,367 a month, which is £46 higher than a year earlier. This marks the slowest annual rent growth since March 2022, indicating a cooling trend in the rental sector as well.
ONS head of housing market indices Ian Boreham observed: “The rental market continues to cool, with UK rents inflation slowing to its lowest annual rate since March 2022.”
Regional variations in rental growth were evident:
- In England, average monthly rents increased to £1,423, up 3.5% year on year.
- Wales recorded a larger increase of 5.8%, with average rents reaching £826.
- In Scotland, rents rose by 2.6% to £1,021, the lowest annual increase in more than four years.
- Northern Ireland’s typical rent was £875 in November 2025, up 5.6% on the previous year.
The overall picture suggests a housing market in transition, with price growth moderating and rental inflation easing, as economic factors such as inflation and interest rates continue to influence buyer and renter behaviour across the UK.
