UK house prices have surged by an average of £10,431 over the past year, bringing the typical property value to £294,818, with demand for larger homes playing a key role in this growth.
Easing interest rates have improved mortgage affordability, pushing annual property price growth to 3.7% in January 2025, a significant rise from just 1% at the start of 2024, according to data from Halifax.
This latest increase has seen house prices surpass their previous peak in August 2022, which was set during the pandemic-driven property boom.
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Terraced houses have been the standout performers, recording a 4.5% price increase to reach an average of £235,296.
Detached properties have also seen substantial growth, rising 4.1% to £471,748.
Meanwhile, flats experienced the slowest growth rate at 3.2%, bringing their average price to £168,569. Semi-detached homes saw a 3.8% rise, now averaging £307,685.
Amanda Bryden, head of Halifax Mortgages, noted as quoted by UK Yahoo Finance: “The fortunes of different property types tend to ebb and flow depending on broader market conditions. This time last year, the average price of a flat had risen more quickly than a detached house, as buyers adjusted to higher borrowing costs and sought to compensate by targeting smaller properties.
“Now, as interest rates have started to ease, it’s once again those homes offering more space which are fuelling demand. And that’s not just a short-term trend; over the last decade, bigger properties have tended to outperform smaller homes when it comes to price growth.”
Terraced homes have led property price increases throughout much of the past year, peaking at a 5.7% rise in October 2024 before moderating to 4.5% at the start of 2025.
Over the past 12 months, prices for these homes have increased by £10,025.
Toby Leek, president of NAEA Propertymark, commented: “Not only are buyers looking to take advantage of easing interest rates to secure a bigger home, but other trends, such as a continued increase in people looking for parking spaces and electric vehicle charging, as well as the surge in desire for outside space post-pandemic, are pushing more buyers to pursue larger properties with driveways and gardens, moving away from apartments and flats.
“Terraced homes are likely proving popular among buyers as they often offer a home with a larger garden and parking at a more affordable price allowing many to maintain a sustainable financial balance.
“As different areas across the country offer more value for money, it’s likely we will continue to see buyers adjusting their criteria and broadening their search areas.”
