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UK House Prices Fall 2.6% in January

  //house-home.news-articles.net/content/2026/01/08/uk-house-prices-fall-2-6-in-january.html
  Published in House and Home on Thursday, January 8th 2026 at 5:12 GMT by Daily Express

London, UK - January 8th, 2026 - The UK housing market experienced a noticeable slowdown at the start of the new year, with average house prices falling by 2.6% in January, according to the latest data released today by Halifax, one of the nation's leading mortgage lenders. This marks the steepest decline in six months, raising questions about the future trajectory of property values after a period of relative stability.

The average UK house price now stands at GBP287,913, representing a significant downturn from recent highs. However, it's crucial to note that prices remain approximately GBP4,000 higher than they were at the beginning of 2023, indicating that while a correction is underway, the market hasn't completely reversed its gains from the past year.

Mortgage Rates and Easing Demand: The Primary Drivers

The primary culprit behind the January dip appears to be the sustained increase in mortgage rates. Throughout 2024 and late 2025, the Bank of England incrementally raised interest rates in an attempt to curb inflation, and this has directly translated into higher borrowing costs for prospective homebuyers. This increased financial pressure is leading to a cooling of demand, as fewer individuals can afford to enter or move within the property market.

Kim Kinnaird, Director of Halifax Mortgages, highlighted this correlation: "The decline in house prices is largely attributable to the impact of increased mortgage rates and an overall softening of buyer demand." She also noted, however, that the market isn't facing a complete collapse. "While house price growth remains subdued, it's important to remember that house prices are still around GBP4,000 higher than they were at the start of 2023."

Supply Constraints Offer Support

Despite the downward pressure on prices, several factors are preventing a more dramatic fall. A persistent shortage of properties available on the market continues to underpin values. This lack of supply, combined with a relatively strong labour market--meaning more people are employed and potentially able to afford homes--is cushioning the impact of higher mortgage rates. Many homeowners are choosing to remain in their current properties rather than sell, limiting the number of homes available to prospective buyers.

Looking Ahead: Stability Anticipated, Not Recovery

Experts predict that the housing market will likely remain in a state of relative stability, with modest declines expected in the coming months. Andrew Harvey, a housing market analyst at Santander, suggests that a prolonged period of stagnation is more probable than a significant crash. "The housing market is likely to remain relatively stable over the coming months, with modest house price declines expected," Harvey stated. "We don't foresee a dramatic downturn, but rather a period of consolidation as the market adjusts to the new interest rate environment."

However, this "stability" doesn't necessarily equate to a recovery. The factors driving the slowdown--high mortgage rates and subdued demand--are unlikely to dissipate quickly. Unless the Bank of England begins to lower interest rates, a substantial rebound in house prices appears unlikely.

The regional variations within the UK housing market are also likely to become more pronounced. Areas that experienced the most significant price increases during the pandemic boom are expected to see the largest corrections, while more affordable regions may demonstrate greater resilience. The impact of remote work trends could also continue to shift demand away from densely populated urban centers and towards more rural locations.

Long-Term Outlook: A Balancing Act

The long-term health of the UK housing market will depend on a complex interplay of economic factors, including inflation, interest rates, employment levels, and housing supply. Addressing the chronic undersupply of homes remains a critical challenge, requiring government policies to incentivize building and streamline the planning process. For now, potential homebuyers and sellers should exercise caution and carefully consider their financial situations before making any significant decisions. The January dip serves as a reminder that the era of rapid house price growth is likely over, and a more balanced and sustainable market is emerging.