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House prices across England and Wales cooled at the start of 2026, as a combination of dipping buyer demand and falling transaction volumes gripped the property market.
According to the latest UK House Price Index report published by the Land Registry for January 2026, property values saw modest annual gains but ticked downward on a monthly basis, reflecting a more subdued winter trading period.
While the wider UK property market recorded a subtle annual growth rate of 1.3 percent, performance varied significantly across individual countries and regions:
The data reveals a stark north/south divide across England. The North West topped the leaderboard for annual house price inflation, where property values surged by 3.1 percent over the year. Strong annual performances were also recorded in Yorkshire and the Humber (3.0 percent) and the West Midlands (2.4 percent).
In stark contrast, southern markets continued to struggle. London registered the weakest performance in the country, with annual house price inflation falling deeper into negative territory at -1.7 percent.
Despite the decline, the capital remains by far the most expensive place to buy a home, with an average price tag of £554,422. The South East and South West also saw annual dips, dropping by 0.5 percent and 0.1 percent respectively.
The slowdown in price acceleration aligns with a broader retreat in market activity. The Royal Institution of Chartered Surveyors’ (RICS) January 2026 survey confirmed that the sales market remains distinctly "subdued," with metrics for new buyer inquiries and agreed sales slipping into negative territory.
Hard data from HM Revenue & Customs (HMRC) backed up this sentiment, reporting a massive non-seasonal monthly collapse in transaction volumes between December 2025 and January 2026. Sales volumes plummeted by 24.4 percent in England and 25.9 percent in Wales.
Furthermore, forward-looking indicators point to ongoing stagnation. The Bank of England revealed that mortgage approvals for house purchases dropped to 60,000 in January 2026—falling well below the six-month average of 64,100.
Flats and maisonettes bore the brunt of the market cooling, dropping 1.2 percent in value over the year to an average of £192,251.
Family homes performed significantly better. Semi-detached properties saw the strongest annual growth at 2.7 percent (averaging £273,593), followed closely by terraced houses up 2.4 percent (£227,645), and detached homes ticking up 0.7 percent (£436,443).
For those looking to break into the market, first-time buyers paid an average of £226,465 in January 2026—an increase of 1.3 percent compared to the same time last year, mirroring the broader market stabilisation.