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Annual UK house price growth accelerated to reach 4.9% in the year to January 2025, according to Office for National Statistics (ONS) figures.
The annual rate of house price growth increased from 4.6% in the 12 months to December 2024.
Average house prices increased to £291,000 (4.8% annual growth) in England, £210,000 (6.0%) in Wales, and £187,000 (4.6%) in Scotland, in the 12 months to January 2025.
The average house price in Northern Ireland was £183,000 in the fourth quarter of 2024, marking a 9.0% increase compared with a year earlier.
Within England, the North East had the highest house price inflation in the 12 months to January 2025, at 9.1%, while London had the weakest growth at 2.3%.
Stamp duty discounts are set to become less generous from April, with “nil rate” bands becoming smaller. Stamp duty applies in England and Northern Ireland.
The ONS also said that the average monthly rent across the UK increased by 8.1% in the 12 months to February 2025.
This was slower than an 8.7% increase recorded in the 12 months to January 2025.
The average private rent in the UK was £1,326 per month in February 2025, which was £99 higher than a year earlier.
The figures were released as a separate ONS report showed that Consumer Prices Index (CPI) inflation eased by more than expected.
The rate of CPI inflation slowed to 2.8% in February, from 3% in January, following expectations from analysts that CPI inflation would be slightly higher, at 2.9% in February.
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David Hollingworth, associate director at L&C Mortgages said the slowing in inflation “can have positive implications for mortgage rates if it helps to boost the market’s outlook for interest rate movements.”
He added: “Today’s news may not do enough to materially shift the forecasting though and although this should undoubtedly be seen as good news, it’s widely anticipated that the rate of inflation will lift again in coming months.”
Richard Donnell, executive director at Zoopla said: “Rents are still rising faster than earnings and we expect rental inflation to slow further over 2025.
“House prices are rising on the back of increased activity over 2024 with 10% more sales and lower mortgage rates boosting demand, along with a rush to beat the stamp duty holiday.
“Our latest Zoopla data shows a significant increase in the supply of homes coming onto the market, rising at a faster pace than sales. Together with weaker first-time buyer demand and higher buying costs for most purchases, after April we will see price growth slowing over 2025.”
Jason Tebb, president of OnTheMarket, said: “Affordability remains a challenge but with a number of lenders reducing their mortgage pricing over the past few weeks, this may continue to ease if other lenders follow suit.”
Iain McKenzie, chief executive of the Guild of Property Professionals, said: “The early months of 2025 have been characterised by a surge in activity as buyers and sellers alike looked to finalise transactions ahead of the stamp duty changes.
“This has driven a notable uptick in market momentum, with buyer demand, sales agreed, and new listings all showing positive year-on-year growth.
“While we may see a period of adjustment as the market absorbs the tax increase, improving mortgage rates and continued earnings growth are providing a solid foundation for sustained price stability. The outlook remains cautiously optimistic.”
Nick Leeming, chairman of estate agent Jackson-Stops, said: “The year started strong, driven by the looming stamp duty deadline and a post-Christmas reassessment of lifestyle priorities. This is reflected in our data, with 59% of branches reporting increased buyer interest in the past month.”
He added: “As the ‘spring bounce’ approaches, we expect house prices to hold steady through the first half of the year.”
Tom Bill, head of UK residential research at Knight Frank, said: “House prices should continue to rise faster in relatively more affordable parts of the country.”
Andrew Montlake, chief executive of Coreco mortgage brokers, said: “2025 is unlikely to see stellar house price growth but average values are likely to continue to edge up at a moderate pace due to the lack of supply.”
Mark Eaton, chief operating officer at lender April Mortgages, said: “Inflation may be easing but it will be a while before this is reflected in buyers’ ability to save money for a deposit.”
