UK House Prices Decline 0.7% as Rental Growth Slows Amid High Homeownership Aspirations
Official data reveals a nuanced picture of the UK housing market, with average house prices experiencing a slight decline while rental inflation moderates. However, the dream of homeownership remains robust, particularly among younger generations.
House Price Trends Across the UK
According to the latest figures, the average UK house price stood at £270,000 in December 2025, marking a 2.4% annual increase. This growth rate represents a slowdown from the 2.8% recorded in the previous month. More notably, prices decreased by 0.7% between November and December 2025, a steeper drop compared to the 0.2% decline observed in the same period a year earlier.
Regional variations are significant. In England, average prices rose to £292,000, reflecting a 1.7% annual increase. Wales saw a more substantial rise of 5%, bringing average prices to £215,000. Scotland experienced a 4.9% increase, with average prices reaching £191,000.
Rental Market Dynamics
The rental sector also shows signs of cooling. Average UK monthly private rents increased by 3.5% to £1,367 in the 12 months to January 2026, down from 4% in the previous period. In England, rents averaged £1,423 with a 3.5% increase, while Wales saw rents rise to £826, up 5.8%. Scotland's average rent reached £1,021, a 2.6% increase. Northern Ireland reported a 5.6% rise to £875 for the period ending November 2025.
Within England, rental inflation varied widely, with the North East experiencing the highest rate at 8.0% and London the lowest at 1.1%.
Strong Homeownership Aspirations Among First-Time Buyers
Despite market fluctuations, the desire to own a home remains strong. Pepper Money’s Specialist Lending Study indicates that 85% of Gen Z individuals hope to become homeowners. Furthermore, 1.2 million UK adults expect to purchase a property within the next 12 months, with an additional 7.5 million planning to buy within five years.
However, significant barriers persist. Saving for a deposit is the primary challenge, with the average UK adult having £13,200 in savings—just over a fifth of the £61,900 average deposit required for first-time buyers. Nearly half (49%) of Gen Z buyers rely on financial assistance from family, often referred to as the "Bank of Mum and Dad."
Expert Insights on Market Conditions
Darryl Dhoffer, Founder of Bedford-based The Mortgage Geezer, commented on the current landscape. "Falling swap rates are finally driving down fixed-rate mortgage costs, which is pulling more and more buyers off the fence," he said. "With lender innovation improving access and rental growth squeezing tenants, ownership is becoming the smarter play."
Dhoffer added, "Despite economic gloom, this rate relief is the spark needed to reignite the market. Demand is already firming up, signalling a swift shift back to a sellers' market and house prices rising is inevitable. If you're considering buying, now is the time to do so as prices could start edging up again very soon."
The combination of slightly lower house prices, moderating rents, and declining mortgage rates may create a window of opportunity for aspiring homeowners, though financial hurdles remain a key consideration for many.
