A new house price index, this time from the Office for National Statistics (ONS) which analyses sold price data across all ownership types (including both cash and mortgages) has revealed that average UK house prices were boosted by 4.9% between January 2024 and January 2025, equating to a £13,000 rise.
The data, which is a provisional estimate based on a variety of factors, puts the average UK property price at £269,000, and is a faster annual growth rate than the 4.6% recorded in December as the market gathered momentum at the start of the year.
The report notes that average UK house prices have been rising at an increasing rate since their most recent low point of -2.7% growth in the 12 months to December 2023. This can be attributed to a number of factors, from improving mortgage rates to falling inflation over the past two years.
But while UK house prices overall are on the rise, the North East and North West of England remain the outliers with price growth well above the national average.
The ONS’s figures show that prices in the North East of England increased by a huge 9.1% in the year to January, while price inflation in the North West was significantly ahead of the average at 6.8% growth.
This was followed by the East Midlands (6.2%), Yorkshire and the Humber (5.9%) and the West Midlands region (5.3%). Falling below the national average were the South East (4.5%), the East of England (3%), the South West (2.7%) and London (2.3%).
The ongoing trend of the north surpassing the south when it comes to UK house prices appears to be largely driven by pricing and affordability, linked to the wider economic environment. The most expensive locations have seen a reduction in buyer appetite, particularly since mortgage rates increased although the pattern had emerged prior to 2022.
Meanwhile, locations where properties are more affordable are booming, with homebuyers and investors alike continuing to get more for their money even with prices rising at a faster rate in these areas.
What’s more, with the government’s continued focus on ‘levelling up’ and devolution away from London, many northern parts of the UK are undergoing huge levels of investment and regeneration, which is further boosting property prices as more businesses and residents are drawn to the area.
If the market fundamentals remain as they are, many in the industry expect this pattern to continue, drawing more buyers and investors to the north.
Jonathan Hopper, chief executive of buying agents Garrington Property Finders, said: “House price inflation has moved from brisk to breathless in the most affordable parts of the country.
“England’s north-south divide is as stark as ever, even though average London prices have leapt back into growth territory after stagnating in 2024.”
Reiterating this point, Amy Reynolds, of estate agency Antony Roberts, said: “The housing market is in a holding pattern. Without another interest rate cut or intervention by the Chancellor, transaction levels are unlikely to change.
“The market remains sluggish, with prices holding up due to a lack of stock.”
UK house prices: How they’re measured
Each month, a variety of house price indices are released by a number of sources to analyse UK house prices, with the predominant ones being property portals Zoopla and Rightmove along with banks Halifax and Nationwide.
However, the methodology used varies, which is why buyers and sellers alike must consider a wider range of data in order to get a true picture of the market. While property portals rely on asking price data, meaning the pricing may not reflect what buyers are actually paying, the banks’ reports look at mortgaged transactions, which again loses sight of some of the market such as cash transactions.
The Office for National Statistics (ONS) uses HM Land Registry data to analyse all sold property prices, which can potentially give a more accurate representation of UK house prices. However, there is a slight time lag in order to gather the most accurate figures, meaning the index released this week is for the year to January 2025.
