The tide is turning for UK homebuyers
Things are finally changing for prospective homeowners who have struggled to get on the property ladder.
While house prices continue to rise in the United Kingdom, they are now steadily rising at a pace below wage growth, meaning that housing is becoming more affordable to first-time buyers.
The latest Nationwide House Price Index shows that house prices edged up by 0.3% month-on-month, and are now up just 1% from the same time last year.
The average house price in the UK in January 2026 was £270,873, recovering slightly after the uncertainy of the budget last year.
This muted growth has meant purchasing their own home is becoming more feasible for many in the UK who are renting or living at home, and Nationwide found that first-time buyers accounted for a rising proportion of house purchases in 2025.
It attributed this increased demand from first-time buyers to declining mortgage rates and average earnings outpacing house price growth.
Nationwide Chief Economist Robert Gardner noted that there was also a dip in house buying activity at the end of 2025 due to budget uncertainty, and he predicted that activity would recover soon.
““Housing market activity also dipped at the end of 2025, most likely reflecting uncertainty around potential property tax changes ahead of the Budget,” Gardner said.
“Nevertheless, the number of mortgages approved for house purchase remained close to the levels prevailing before the pandemic.”
“Housing market activity is likely to recover in the coming quarters, especially if the improving affordability trend seen last year (and explored further below) is maintained,” he said.
Nationwide recently examined the improving affordability of homes in the UK, noting that last year, a prospective buyer earning the average UK salary and buying their first home with a 20% deposit would have a monthly mortgage payment equivalent to 32% of their take-home pay.
This is slightly above the average proportion of take-home pay over the past 40 years, but it is well below the high of 38% seen in 2023.
Regional disparity still remains a fundamental character of the UK property market, however, with London and certain areas of England being far less affordable than regions such Scotland and the North.
However, data from last year shows housing affordability improving in every region across the UK, indicating a wider market shift towards improving prospects for first-time buyers.
Areas such as London remain still remain relatively unaffordable, with the average first-time buyer earning 45% more than the average salary. But in areas like Scotland and Yorkshire & The Humber, the actual income of first-time buyers is actually below the average wage, indicating healthy affordability.
