The UK housing market has kicked off 2026 with renewed energy, posting a record January rise in asking prices alongside a sharp rebound in buyer demand. After a quieter end to last year, confidence is clearly returning as buyers and sellers look ahead to the year with greater certainty.

A strong start to the year

January’s house price data points to an active and optimistic market. The average asking price for homes coming to market now stands at £368,031, representing a 2.8% increase compared with December and placing prices 0.5% higher than this time last year. This marks the largest January price increase ever recorded, and the biggest monthly rise seen since June 2015.

This rebound has effectively brought asking prices back to where they were in late summer 2025, following a period of uncertainty linked to last November’s Budget. With those concerns now behind us, the market appears to have regained its footing.

Momentum has also been reflected in online activity. Rightmove recorded its busiest ever Boxing Day, with visits jumping 93% compared with Christmas Day. In the five days immediately after Christmas, buyer enquiries rose by 67%, while the number of new homes coming to market surged by 143%, underlining just how quickly confidence returned after the festive pause.

What this means for sellers

The recent uplift in asking prices suggests seller confidence is running high. However, the increase in market activity has also been accompanied by a sharp rise in supply. The number of homes listed for sale increased by 81% in the two weeks after Christmas, compared with the fortnight before, pushing available stock to its highest level for this time of year since 2014.

With so much choice now available, buyers are becoming more selective. Around one third of homes currently on the market have already reduced their original asking price, highlighting the importance of pricing realistically from the outset. Sellers who strike the right balance between ambition and market awareness are far more likely to attract interest and secure a sale.

What this means for buyers

Buyer demand has also made a strong return. Activity in January is broadly in line with levels seen in early 2024, despite last year being distorted by buyers racing to complete before April’s stamp duty changes.

In the two weeks following Christmas, buyer demand increased by 57% compared with the previous two weeks, providing an encouraging early signal as the market heads towards the spring selling season. Whether this momentum can be sustained remains to be seen, but the signs so far are positive.

While recent price rises may give some buyers pause, particularly first-time buyers, it’s worth noting that asking prices have simply returned to their pre-Budget levels from summer 2025, rather than pushing into new territory.

Performance across buyer segments

Across the market as a whole, average asking prices are up 2.8% month on month and 0.5% year on year. Homes typically bought by first-time buyers now average £225,544, reflecting a monthly increase of 1.6%, though values remain 0.7% lower than a year ago.

Second-stepper homes, often suited to growing families, now average £341,131, having risen 2.0% in January and 0.5% annually. At the top end of the market, larger “top of the ladder” homes average £658,658, with prices up 2.6% on the month and 0.5% over the year.

Regional trends vary widely

While the national picture shows recovery, performance varies considerably by region. London has recorded an annual price increase of 0.9%, supported by a strong 2.8% rise during January alone. The North East continues to lead the way, posting the strongest annual growth of any region at 3.4%, driven by a substantial 7.0% monthly increase.

By contrast, the East of England has seen prices fall 0.3% year on year, despite a healthy 3.0% monthly rise, while the Southeast has recorded a 1.6% annual decline, even after prices increased 1.7% during January. Scotland has delivered steadier performance, with prices 1.7% higher than last year, despite a small monthly dip.

Mortgage rates support affordability

Mortgage affordability continues to underpin buyer confidence. While rates did not fall as sharply as some had predicted early last year, the gradual easing of interest rates throughout 2025 created a more stable lending environment.

As of January 2026, the average two-year fixed mortgage rate stands at 4.29%, down from 5.03% a year earlier. For buyers with larger deposits, some of the most competitive two-year fixed deals are available from 3.47%.

This improvement can make a meaningful difference to monthly costs. A buyer purchasing at the national average asking price with a 20% deposit could now save over £100 per month compared with the same purchase last year, although actual savings will vary depending on individual circumstances and lender criteria.

Looking ahead

The housing market has made a confident start to 2026, with both buyers and sellers keen to act early rather than wait for the traditional spring rush. Improving mortgage affordability, strong post-Christmas demand and rising stock levels suggest a busy first quarter ahead.

While it remains to be seen whether this momentum will carry through the peak spring selling season, one thing is clear: well-priced homes are attracting strong attention, and realistic pricing will remain the key to success in a market where buyers have more choice than in recent years.

Data source: Rightmove House Price Index, January 2026