The housing market has kicked off the new year with a surge following a significant rise in prices. According to property website Rightmove, the average home price has increased by nearly £9,900 to reach £368,031 since December. This 2.8% spike in January is the largest seen in Rightmove’s 25-year history of reporting and the most substantial month-on-month increase since June 2015.
Rightmove attributes this market rebound to Chancellor Rachel Reeves’ Budget announcement at the end of November, which dispelled previous rumors and uncertainties that were dampening market activity. Despite the positive momentum, Rightmove cautions potential sellers that the market remains challenging. The number of homes available for sale is at its highest level for this time of year since 2014, with a third of listed properties experiencing price reductions. Market conditions vary across regions, with the market described as “volatile.” While most regions saw price increases, the East Midlands and Scotland witnessed price declines.
Buyer demand surged in the two weeks following Christmas Day, with a 57% increase in inquiries to agents about homes for sale and an 81% rise in newly listed properties compared to the preceding two weeks. The demand has been supported by declining mortgage rates, with major lenders making notable rate cuts at the end of 2025 and the beginning of this year.
Colleen Babcock, a property expert at Rightmove, noted a positive start to the year as sellers show confidence in listing homes at higher prices after a period of subdued price growth. However, she advises sellers to heed their agent’s guidance when setting asking prices to avoid being overly optimistic. With a high number of homes for sale and a significant proportion undergoing price reductions, sellers are advised to be realistic in pricing their properties to attract buyers.
Myles Moloney, director at Chase Buchanan estate agents in London, commented on the active market, highlighting the popularity of homes meeting current buyer preferences like those with strong schooling options and spacious open-plan living areas. Families looking for modern living spaces are driving the market, with an increase in activity from second or third-time homebuyers at the beginning of the year.
The push for early home purchases in 2026 is driven by improved affordability due to mortgage rate cuts. Well-presented homes priced sensibly for modern family living are attracting the highest levels of attention in the current market landscape.