- In January, house prices were up 0.1% in a month and 4.1% in a year (both seasonally adjusted figures).
- The average house price was £268,213 – not far off the record highs hit during the pandemic.
Nationwide has released its house price index for January: House price growth softens at the start of 2025
Sarah Coles, head of personal finance, Hargreaves Lansdown:
“House prices crept up in January. It wasn’t exactly a stellar start to the year, especially compared to the powerful growth we saw in December. However, prices are still under pressure from buyers trying to clamber through the stamp duty holiday window, before it slams shut at the end of March. Another small bump for house prices is another knock for first time buyers.
The property market risks becoming a victim of its own success, with prices near a record high. Nationwide said the house price to earnings ratio hit 5.0 at the end of 2024, which is well above the long run average of 3.9. When you add in the fact that the average 2-year fixed rate mortgage stuck stubbornly around the 5.52% mark this week (Moneyfacts), potential buyers will be horribly stretched.
The challenge for first timers is even more difficult, because they’re having to build an ever-growing deposit at a time when their rental costs have shot through the roof. January’s HL Savings & Resilience Barometer shows that the average renter has just £62 left at the end of the month, so they have to work incredibly hard to build a meaningful deposit.
If you’re in this position, it’s worth talking to family, especially if they’re considering making gifts in order to deal with an inheritance tax threat. Nationwide says that 40% of buyers get help of this kind. However, if you don’t have the luxury of a wealthy family, there’s still something you can do. If you already have a Lifetime ISA, topping up with up to £4,000 this tax year will unlock a government bonus of up to £1,000. If you don’t yet have one, you’re aged 18-39, and have at least a year until you plan to buy, you can open one now and get a leg up on the property ladder.”
