UK house prices recorded their highest monthly increase since 2020, driven by a surge in new sellers entering the market in January, according to property website Rightmove.
Average house prices rose by 1.7% in January compared to December, following a 1.7% decline in the previous month. On an annual basis, house price growth accelerated to 1.8% from 1.4% in December.
Rightmove reported that the number of properties listed by new sellers was up by 11% compared to the same period last year. This influx of early-bird sellers provided buyers with the greatest choice of properties since 2015.
Colleen Babcock, a property expert at Rightmove, noted that the rise in new seller asking prices reflects a strong start to the year. However, Babcock warned that the current competition among sellers is expected to moderate in the coming months. Rightmove forecasts a total of 1.15 million property transactions in 2025, with average asking prices projected to rise by 4%.
Despite the optimistic start to the year, challenges remain, according to Babcock. Uncertainties surrounding interest rate trends and the impact of increased stamp duty from April 1 could influence the housing market.
The Bank of England maintained its benchmark rate at 4.75% in December in line with market expectations, as CPI inflation, wage growth and some indicators of inflation expectations had risen, adding to the risk of inflation persistence. However, three policymakers preferred to reduce the bank rate by 25bps to 4.5% on the back of sluggish demand and a weakening labour market.
“The markets are still banking on a cut in February, but after that it becomes uncertain,” Matt Smith, mortgage expert at Rightmove said. “I think we’ll need to get settled into the year a little more before the direction of travel for rates this year becomes clearer,” he added.