UK house prices rose 2.4% in the year to December but fell 0.7% on the month, leaving the average property valued at £270,000, as growth slowed sharply across London and southern England, according to official data.

The Office for National Statistics said that London was the only region to record an annual decline, with prices down 1% to £551,294. The North East saw the strongest growth at 4.6%. Across England, average prices rose 1.7% to £292,000, while Wales recorded a 5% increase to £215,000 and Scotland a 4.9% rise to £191,000. In Northern Ireland, the average house price climbed 7.5% year on year to £196,000 in the fourth quarter.

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Ian Futcher, financial planner at Quilter, said: “The housing market saw a disappointing end to 2025, according to the government’s latest house price index, with the average UK house price falling by 0.7% in December. On an annual basis, prices rose by 2.4%, bringing the average property price to £270,000.”

He added that London “fared the worst in 2025, making it the only UK region to have seen a fall on an annual basis,” reflecting the combined impact of the autumn budget and the usual year-end lull.

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Affordability pressures, higher supply in southern England, and subdued buyer demand are keeping a lid on price growth. Richard Donnell, executive director at Zoopla, said: “House price growth has slowed across the country, with the weakest growth being reported across England, with prices falling across London and flat across southern England.” He noted that demand remained 8% below the same period last year, while regions with lower supply and more affordable homes could see stronger growth.

The rental market is also cooling. Average UK private rents increased 3.5% in the year to January, reaching £1,367, the slowest annual rise since March 2022.

The average monthly rent in England was £1,423 in January 2026, up 3.5% (£48) year-on-year. This was the lowest annual growth rate since March 2022.

In Wales, the average monthly rent was £826 in January, up 5.8% (£45) from a year earlier. The annual rise was higher than the 5.7% yearly increase recorded in December 2025.

Average monthly rent for Scotland was £1,021 in January 2026, up 2.6% (£25) from a year earlier. The ONS said this was the lowest annual rise it had recorded for more than four years. But its report cautioned against comparing the figures with those of other countries, due to data collection limitations in Scotland.

The typical monthly rent in Northern Ireland was £875 in November 2025, the latest month for which this figure is available. This marks a 5.6% (£46) increase compared to a year earlier.

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Nathan Emerson, chief executive of Propertymark, said: “A slowing in the annual growth of rents may offer some relief for tenants but can also be attributed to localised shifts in demand or changes in supply dynamics.” He added that rents continue to rise month on month and called for policies to support investment and maintain adequate rental stock.

Inflation fell to 3% in January from 3.4% in December, reinforcing expectations of potential interest rate cuts. Hina Bhudia, partner at Knight Frank Finance, said: “The combination of softer inflation data this morning and weak jobs figures yesterday raises the likelihood of two rate cuts this year.”

Analysts also said that while mortgage rates have eased from their recent peaks and lenders are increasingly competing for borrowers, any improvement in affordability is likely to be gradual.

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