UK house prices saw a slight increase of 0.1% in January compared to December, signaling a slowdown in momentum after more significant rises in previous months, according to mortgage lender Nationwide.

While economists had expected a 0.3% monthly increase, prices in January were 4.1% higher than the same month in 2024, marking a slight decrease from December’s annual rise of 4.7%.

Despite affordability pressures, particularly for first-time buyers, the housing market has remained resilient.

Nationwide's chief economist, Robert Gardner, noted that buyers are facing historic affordability challenges, with a typical first-time buyer now paying a monthly mortgage equivalent to 36% of their take-home pay.

This is well above the long-term average of 30%.

Around 40% of first-time buyers have received assistance in raising deposits, often through gifts, loans, or inheritances.

Recent data from the Bank of England also showed a rise in net mortgage lending volumes, indicating a strengthening demand for housing.

Analysts predict that temporary tax incentives expiring in March 2025 and rising wages, along with anticipated interest rate cuts, may stimulate further demand.

Nationwide has forecast that UK house prices will increase by 2% to 4% in 2025.