UK house prices rise £6,000 in a month in biggest new year bounce since 2020, Rightmove says
UK HOUSE prices rose by nearly £6,000 in January, according to Rightmove.
Across Britain, the typical asking price for a home coming onto the market increased by 1.7%.
The average asking price of a home in the UK is now £366,189 – £5,992 more than in the previous month.
Although house prices have risen, they are still £8,942 below the record set in May 2024, which reflects affordability constraints, Rightmove said.
It has forecast an average asking price increase of 4% across this year.
The number of new properties put on the market, volume of buyers contacting estate agents and number of sales being agreed are ahead of the start of the year period last year, according to the report.
But there is still uncertainty, it warned.
Questions remain about the pace and number of interest rate cuts, while “sticky” mortgage rates keep the cost of borrowing high.
Meanwhile, it is not yet clear what the impact of stamp duty changes from April will have.
From April 1, 2025, the threshold at which first-time buyers must pay stamp duty will be reduced from £425,000 to £300,000.
Stamp Duty applies in England and Northern Ireland.
Rightmove suggests that smaller homes, which are typical in the first-time buyer sector, will be particularly affected.
It predicts that first-time buyers in less expensive parts of England will be mostly unaffected by the stamp duty change.
But the lower threshold will act as a drag on the important bottom-of-the-ladder market in some more expensive areas.
Some New Year sellers may also find they have been too optimistic about the price they put their home on the market for.
This could mean their home was left on the shelf in favour of more competitively priced neighbours, Rightmove added.
How to get the best deal on your mortgage
IF you're looking for a traditional type of mortgage, getting the best rates depends entirely on what's available at any given time.
There are several ways to land the best deal.
Usually the larger the deposit you have the lower the rate you can get.
If you’re remortgaging and your loan-to-value ratio (LTV) has changed, you’ll get access to better rates than before.
Your LTV will go down if your outstanding mortgage is lower and/or your home’s value is higher.
A change to your credit score or a better salary could also help you access better rates.
And if you’re nearing the end of a fixed deal soon it’s worth looking for new deals now.
You can lock in current deals sometimes up to six months before your current deal ends.
Leaving a fixed deal early will usually come with an early exit fee, so you want to avoid this extra cost.
But depending on the cost and how much you could save by switching versus sticking, it could be worth paying to leave the deal – but compare the costs first.
To find the best deal use a mortgage comparison tool to see what’s available.
You can also go to a mortgage broker who can compare a much larger range of deals for you.
Some will charge an extra fee but there are plenty who give advice for free and get paid only on commission from the lender.
You’ll also need to factor in fees for the mortgage, though some have no fees at all.
You can add the fee – sometimes more than £1,000 – to the cost of the mortgage, but be aware that means you’ll pay interest on it and so will cost more in the long term.
You can use a mortgage calculator to see how much you could borrow.
Remember you’ll have to pass the lender’s strict eligibility criteria too, which will include affordability checks and looking at your credit file.
You may also need to provide documents such as utility bills, proof of benefits, your last three month’s payslips, passports and bank statements.
Colleen Babcock, a property expert at Rightmove, said: “With lots of homes for buyers to consider, sellers will need to work even harder to stand out from the crowd and attract a buyer.
“This could be with a tempting asking price, standout home features, immaculate presentation of the home, or a combination of all of these.
“It’s vital that in a competitive market, sellers take on the recommendations of their agent, particularly when it comes to setting a realistic price.”
She added that sellers should look at the bigger market picture.
She said: “Many buyers are still affordability-stretched, with high mortgage rates restricting borrowing power and limiting what they can afford to pay.
“Meanwhile, first-time buyers have seen support schemes reduce and some also face higher stamp duty fees from April, all while contending with record rents and trying to save up for a deposit.”
She suggests that for market momentum to be sustained, it needs early and ongoing interest rate cuts, which should help to reduce mortgage rates.
Who else tracks house prices?
Halifax is part of Lloyds Group, which is the UK’s largest mortgage lender.
Its monthly house price index is based on the mortgage data it holds and is the longest-running monthly house price tracker.
It is one of the key barometers of the property market.
Nationwide also publishes a monthly index that tracks the average price of homes on which it provides mortgages.
Both lenders measure average house prices based on the properties they see.
But their figures are based on mortgage approvals, so they do not include cash buyers who purchase a property without needing a mortgage.
Official figures on house prices come from the Office for National Statistics (ONS).
It uses data from the Land Registry where the actual sold price is recorded.
As a result, this is the most accurate of all of the house price indices.
But the figures are released three months after the homes are sold, so there is a big time lag.
Rightmove and Zoopla also publish monthly house price data.
Rightmove uses asking prices from the property listings on its website.
Zoopla uses the sold prices, mortgage valuations and data on agreed sales.
Neither property website considers the price a property actually sells for, like the ONS does.
This means the actual price a property fetches could be higher or lower – or it may not sell at all.
Here is the latest data from the other indices:
- Nationwide – house prices rose by 0.7% in December and increased 4.7% annually. A typical property is now worth £269,426.
- ONS – house prices increased by 3.3% in the 12 months to November, with an average property valued at £290,000.
- Halifax – property prices fell by 0.2% in December but annually prices are up 3.3% pushing up the cost of a typical property to £297,166.
- Zoopla – A typical home in the UK was worth £267,500 in November. Property prices are 1.9% higher than a year ago.
What is the base rate and how does it affect the economy?
NINE members of the Bank of England's Monetary Policy Committee meet eight times each year to set the base rate.
Any change to the Bank’s rate can have wide-reaching consequences as it directly influences both:
- The cost that lenders charge people to borrow money
- The amount of savings interest banks pay out to customers.
When the Bank of England lowers interest rates, consumers tend to increase spending.
This can directly affect the country’s GDP and help steer the economy into growth and out of a recession.
In this scenario, the cost of borrowing is usually cheap, and the biggest winners here are first-time buyers and homeowners with mortgages.
But those with savings tend to lose out.
However, when more credit is available to consumers, demand can increase, and prices tend to rise.
And if the inflation rate rises substantially – the Bank of England might increase interest rates to bring prices back down.
When the cost of borrowing rises – consumers and businesses have less money to spend, and in theory, as demand for goods and services falls, so should prices.
The Bank of England is tasked with keeping inflation at 2%, and hiking interest rates is a way of trying to reach this target.
In this scenario, the losers are those with debt.
First-time buyers will lose out to cheaper mortgage rates, and those on tracker or standard variable rate mortgages are usually impacted by hikes to the base rate immediately.
Those on a fixed-rate deal tend to be safe if they fixed when interest rates were lower – but their bills could drastically increase when it’s time to remortgage.
The cost of borrowing through loans, credit cards and overdrafts also increases when the base rate rises.
However, the winners in this scenario are those with money to save.
Banks tend to battle it out by offering market-leading saving rates when the base rate is high.
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