The UK housing market continues its upward trajectory, with average house prices reaching a new record high of £294,818. This represents a significant increase of £10,431 over the past year, fueled by easing interest rates and a growing demand for larger properties.
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Halifax, a leading UK lender, reports that annual property price growth accelerated to 3.7% in January 2025, a substantial jump from the 1% recorded at the start of 2024. This surge has propelled average house prices beyond the previous peak observed in August 2022 during the pandemic-driven housing boom.
Detached and Terraced Houses Lead the Price Rally
Terraced houses have emerged as the strongest performers in the market, with prices climbing by 4.5% to an average of £235,296. Detached properties also witnessed impressive gains, rising by 4.1% to reach an average of £471,748. Flats, on the other hand, experienced the slowest growth at 3.2%, with an average price of £168,569. Semi-detached homes saw a 3.8% increase, reaching an average of £307,685.
Amanda Bryden, head of Halifax Mortgages, attributes this trend to shifting market dynamics. She notes that while smaller properties were favored last year as buyers adjusted to higher borrowing costs, easing interest rates have now reignited demand for more spacious homes. This preference for larger properties aligns with a longer-term trend observed over the past decade.
Regional Variations in House Price Growth
Terraced house price growth has been robust over the past year, peaking at a 5.7% increase in October 2024 before moderating to 4.5% in January 2025. This translates to an average price increase of £10,025 over the year. Regionally, the North East experienced the strongest annual growth for terraced houses at 8.4% (£10,263), while Yorkshire and Humberside saw the slowest growth at 2.7%.
Semi-detached properties also saw substantial price increases, averaging 3.8% (£11,367) nationally. Northern Ireland led the way with a 7.0% increase (£11,835), while Scotland lagged behind with a modest 0.7% growth.
Detached Homes Reach New Price Heights
The higher end of the market, characterized by detached homes, recorded an annual growth of 4.1%, adding £18,704 to the average price, which now stands at £471,748. This surpasses the previous peak set in September 2022 and is just shy of the record high reached in September 2024.
Northern Ireland witnessed the most significant annual growth for detached properties at 15.2% (£35,857), while London recorded the weakest performance at 0.9%. Despite this slower growth, London continues to command the highest average price for detached properties at £944,526, approximately five times higher than the most affordable detached homes found in the North East (£190,757).
UK Housing Market Outlook Remains Strong
The UK housing market’s robust performance reflects the combined influence of easing interest rates and sustained demand for larger properties. While regional variations exist, the overall trend points to continued growth in house prices, driven by evolving buyer preferences and broader economic conditions. This sustained momentum suggests a positive outlook for the UK housing market in the near term.
