UK house prices increased by 1.2% annually in February, edging up from a 1.0% rise in January, according to the Office for National Statistics (ONS). The average UK house price stood at £268,000.
Regional Variations
In England, average prices reached £290,000, reflecting 0.8% annual growth. Wales saw a 2.5% increase to £210,000, while Scotland recorded 2.3% growth to £187,000. In Northern Ireland, the average price was £196,000 in the fourth quarter of 2025, marking a 7.5% annual rise.
Yorkshire and the Humber led English regions with 3.9% annual house price inflation. Conversely, London experienced a 3.3% annual decline in February, the seventh consecutive monthly fall and the weakest annual change since January 2024, when prices dropped 3.5%.
Market Context
The ONS report coincided with data showing UK CPI inflation rose to 3.3% in March from 3% in February, in line with economist predictions. The Middle East conflict has pushed up price expectations.
Many lenders have recently cut fixed mortgage rates as swap rates eased. David Hollingworth of L&C Mortgages noted a growing number of lenders trimming rates, adding that the inflation news should not disrupt that trend. He highlighted that homeowners are watching the Bank of England's next interest decision for clues on base rate direction.
Mark Harris of SPF Private Clients said affordability concerns persist, but recent rate reductions by Santander, HSBC, and Skipton offer relief. Nicky Stevenson of Fine & Country noted that while spring has improved activity, buyers remain cautious and can negotiate.
Rental Market
Average UK monthly private rents rose 3.4% annually to £1,377 in March, easing from 3.6% growth in February. Regional rents varied: England £1,434 (3.4% growth), Wales £830 (4.8%), Scotland £1,022 (2.1%), and Northern Ireland £880 (5.0% annual increase in January).
In England, the North East saw the highest rental inflation at 6.5%, while London had the lowest at 1.7%.
Expert Commentary
Richard Donnell of Zoopla said sellers are being realistic on price, explaining the modest 1.2% rise. He stressed the need for policies to boost rental supply to moderate inflation and ease cost-of-living pressures.
Ian Futcher of Quilter noted that mortgage cost changes take time to affect house prices. He warned that the sharp rise in borrowing costs after February may weigh on spring and early summer activity, especially for first-time buyers. The outlook depends on geopolitical risks; if tensions ease and energy inflation recedes, mortgage rates could edge lower, supporting flat prices rather than a sharp correction.
