House prices hit a record high, reveals Halifax, as the average home now costs almost £300,000

House prices have reached another record high, according to latest figures from Britain’s biggest mortgage lender Halifax.

It revealed the average house price rose by 0.7 per cent in January alone, with the typical home now selling for £299,138.

Someone buying the typical British home would now need to find almost £9,000 more than a year ago, Halifax’s figures show. 

But despite the near-£2,000 monthly jump in average house prices, property inflation is slowing, with house prices up 3 per cent annually in January, compared to 3.4 per cent the month before.

Homebuyers are continuing to struggle with much higher mortgage costs, although rates have shifted down from their peak and the Bank of England cut base rate again yesterday.

Amanda Bryden, head of mortgages at Halifax, says that while property remains too expensive for many aspiring homeowners there are reasons for positivity.

She said: ‘Affordability is still a challenge for many would-be buyers, but the market’s resilience is noteworthy

‘There’s strong demand for new mortgages and growth in lending. With a stamp duty increase looming, some of this demand may have come from first-time buyers eager to complete transactions before the end of March.’

Buyers face a jump in stamp duty bills to buy a home from April, after Chancellor Rachel Reeves called time in her Autumn Budget on higher thresholds for the tax to kick in.

The threshold at which first-time buyers start paying stamp duty will fall from £425,000 to £300,000 from 1 April this year. This would mean that instead of paying no stamp duty on a purchase worth £425,000, they would pay £6,205.

For other buyers, the standard stamp duty threshold is falling from from £250,000 to £125,000, triggering an extra charge of up to £2,500

Bryden added: ‘Despite geopolitical uncertainties, and waning consumer confidence, other key indicators look fairly positive for the housing market. 

‘The Bank of England has made its first base rate cut of the year, and there are probably more to come. 

‘Household earnings are expected to continue outpacing inflation – albeit that gap may narrow – easing some of the financial pressure still being felt from the cost-of-living squeeze.’

Creeping up: Average prices rose by 0.7 per cent in January, more than recovering the slight dip of 0.2 per cent in December

What are house prices doing across the UK? 

The rate of house price growth varies across the country. 

In England, the North East has overtaken the North West as the region with the strongest annual property price growth at 5.2 per cent.

This is the first time since September 2023 that the North West has not topped the table of English regions for annual growth, according to Halifax.

London retains the highest average house price in the UK, at £548,288, but property inflation was relatively low at 2.8 per cent.

Prices in Northern Ireland were up 5.9 per cent annually, in January, while house prices in Wales were up 3.6 per cent.

Scotland has seen a lower rise in house prices compared to the rest of the UK, with properties in the country now worth an average of £210,690, up 2.4 per cent on the year before.

Buying agent, Jonathan Hopper of Garrington Property Finders says while the northern regions are outperforming the south, there is also another divide appearing. 

‘The eye-catching jump in prices that Halifax recorded at a national level is deceptive. Look more closely at the data and it becomes clear that accelerating price growth is far from universal – in fact it slowed in two-thirds of the UK’s nations and regions,’ said Hopper.

‘The north-south divide is getting bigger as northern regions, where value is perceived as better, post some increasingly punchy numbers. Prices in the North East grew nearly twice as fast as prices rose in London.

‘Even more striking is the price divide. If the mainstream market is going like a train, the prime market is going like a glacier.

‘Price growth has slowed to a crawl, or is flat, in some of Britain’s most expensive and desirable locations. Two factors lie behind this – an abundance of homes for sale, and the intensely price-sensitive approach being taken by buyers.

‘With the supply of prime homes for sale outstripping demand, wealthy buyers find themselves spoilt for choice and able to negotiate hard on price. 

‘While at the bottom end of the market, some first-time buyers have been viewing in haste and offering high in order to do a deal quickly in an effort to beat next month’s stamp duty deadline, at the top end of the market it’s the opposite.’

What next for house prices?

While house prices look more likely to rise than they did this time last year, there is no indication of there being a boom anytime soon.

For a start, most buyers are having to absorb mortgage rates of between 4 per cent and 5 per cent – and this looks unlikely to change unless interest rates are cut further and faster than expected by the Bank of England.

The central bank did cut interest rates yesterday from 4.75 per cent to 4.5 per cent, but this was all but priced into the mortgage market already.

The type of house price growth seen during the pandemic boom looks hard to imagine now when considering mortgage rates. 

Three years ago, in January 2022, when house prices were up 9.7 per cent year-on-year, according to Halifax, most buyers were securing mortgage rates of between 1 and 2 per cent.

The difference between a 25-year £200,000 mortgage on a 1.5 per cent rate and a 4.5 per cent rate is an extra £311 a month.

> Mortgage calculator: How much will higher rates cost you

This is perhaps one of the main reasons why so many house price forecasts were cautious for growth prospects in 2025. 

At the start of the year, Halifax forecast that house prices will rise by between 0 and 3 per cent.

The estate agent Knight Frank is predicting an even slighter 2.5 per cent rise for 2025 and the evidence so far this year has done little to suggest prices will do any better.

Tom Bill, head of UK residential research at Knight Frank, said: ‘Supply has risen more than demand in 2025, which should keep downwards pressure on prices in the short-term. 

‘Underpinned by a stamp duty rise in April, there have been tentative signs of stability in recent weeks, especially among needs-driven buyers in equity-rich markets where the impact of higher mortgage rates has been felt less acutely. 

‘How long that lasts depends on the bigger economic picture, including whether the UK gets caught in the crossfire of a trade war between the US and EU, how stubborn inflation proves to be and the impact of the Chancellor’s fast-disappearing financial headroom.’