The real estate market has kicked off the new year with a surge following a significant increase in property prices. The average home price has risen by nearly £9,900 to reach £368,031 since December, as reported by property website Rightmove. This 2.8% spike represents the largest January increase in Rightmove’s 25-year history and the most substantial month-on-month rise since June 2015.

Rightmove attributed this market rebound to Chancellor Rachel Reeves’ Budget announcement at the end of November, which dispelled earlier rumors and uncertainties that had been dampening activity.

Despite the positive momentum, Rightmove cautioned potential sellers about the challenging market conditions. The current number of homes available for sale is at its highest for this time of year since 2014, with one-third of listed properties experiencing price reductions. Market conditions vary widely across regions, with some areas experiencing price falls contrary to the general upward trend.

Buyer demand surged significantly in the two weeks following Christmas Day, with a 57% increase in inquiries to agents and an 81% rise in newly listed properties. This heightened demand can be attributed to the gradual decrease in mortgage rates, with several major lenders announcing rate cuts at the end of 2025 and the beginning of 2026.

Colleen Babcock, a property expert at Rightmove, expressed optimism about sellers listing their properties at higher prices and the return of potential buyers to the market. However, she advised sellers to heed their agent’s guidance when setting asking prices and to avoid overpricing. With a surplus of available homes and a considerable number of properties undergoing price reductions, sellers are urged to be realistic to attract buyers in the current market.

Myles Moloney, director at Chase Buchanan estate agents in London, noted the increased activity in the market, particularly for homes that meet current buyer preferences such as those with strong schooling options and spacious open-plan living areas. He highlighted the importance of well-presented homes priced appropriately to meet modern family living needs, which are garnering the most attention from buyers.

Overall, the market shows promising signs of activity and demand, fueled by factors like improved affordability through mortgage rate cuts and the availability of homes that cater to the evolving needs of buyers.