UK House Prices Forecast to Rise in 2026

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UK House Prices Forecast to Rise in 2026

UK house prices could rise by up to 4% in 2026, according to the latest forecasts from two of the country’s largest mortgage lenders, Nationwide and Halifax.

While both lenders expect a more modest pace of growth than seen in previous boom years, their predictions point to a housing market that continues to strengthen gradually as affordability improves and interest rates ease.

 

What Are the Major Lenders Predicting?

Nationwide is the more optimistic of the two, forecasting house price growth of between 2% and 4% next year. The lender believes improving affordability will be the key driver, helped by incomes continuing to rise faster than house prices and a further, modest reduction in interest rates.

Robert Gardner, Chief Economist at Nationwide, commented:

“Looking ahead, we expect housing market activity to strengthen a little further as affordability improves gradually, as it has been in recent quarters, via income growth outpacing house price growth and a further modest decline in interest rates. We expect annual house price growth to remain broadly in the 2 to 4% range next year.”

Halifax, meanwhile, is slightly more cautious, predicting growth of between 1% and 3% in 2026. Despite expectations that wage growth may slow and unemployment could edge higher, Halifax believes lower interest rates and easing inflation will help improve buyers’ purchasing power.

Amanda Bryden, Head of Halifax Mortgages, said:

“Looking ahead to 2026, we expect house prices to rise modestly, by somewhere between 1% to 3%. While wage growth is expected to slow and unemployment may edge higher, lower interest rates and easing inflation should help to gradually improve home buyers’ purchasing power.”

Graphic of UK House Prices Forecast to Rise in 2026

Will Budget Changes Affect the Housing Market?

Nationwide has played down the immediate impact of recent Budget announcements on the housing market. The proposed high-value council tax surcharge is not due to be introduced until April 2028 and is expected to affect less than 1% of properties in England and around 3% in London.

However, changes to taxes on income from property may reduce buy-to-let activity further. This could limit the supply of new rental homes coming to the market, potentially keeping upward pressure on private rents in the short to medium term.

What Does This Mean for Buyers and Sellers?

For buyers, gradual price growth combined with easing mortgage rates could make 2026 a more stable and predictable time to move, particularly for first-time buyers who have been challenged by affordability in recent years.

For sellers, steady price growth suggests continued demand, especially in well-priced and desirable areas, as confidence slowly returns to the market.

If you’re thinking about buying, selling, or investing in property over the next year, staying informed on market trends is key. Our team is always happy to offer local insight and expert advice tailored to your circumstances.

Get in touch with us today to discuss your property plans for 2026.

What does the housing market look like for first time buyers in 2025?

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What does the housing market look like for first time buyers in 2025?

The shape of the housing market has shifted dramatically over the past few decades. When we talk about first time buyers now, we’re really referring to a different demographic than that of 25 years ago, when the average age of a first time buyer was 29. Today, it’s risen to 34. 

Additionally, the stamp duty holiday for First time buyers is due to finish at the end of March this year. This means that the current 0%-rate threshold for first time buyers will reduce from £425,000 down to £300,000. We can assume that there will be an influx of customers trying to push through completion by the end of March.

Who are the first-time buyers now?

We’ll continue to see support from BOMAD (the ‘Bank of Mum and Dad’) in the form of deposits for around 40% of first-time buyer purchases in 2025. The average gift being given by family members is c.£25,000 – a trend that is more concentrated in London and the Southeast, where property prices are higher. This boost to deposits means that those first-time buyers can benefit from either lower monthly mortgage repayments or from being able to buy a home sooner.

More affluent first-time buyers with parental support will continue to constitute a significant proportion of the first-time buyer population, while home ownership for younger adults outside of this demographic will remain challenging. According to the 2021 census, 4 million adults now live with parents – an increase of nearly 15% compared to 2011.

Deposit raising and affordability remains difficult, to the point that we could probably call it the collapse of youth home ownership. And really, there’s nothing that suggests the market is going to get easier for this demographic in 2025.

Where does this leave young people today? The scale of the financial challenge that young adults face is evident when we scrutinise real data on their earnings and savings. Only a small minority (8%) of those aged 25-to-34 who are not homeowners have sufficient savings to afford a 10% deposit on the average first-time buyer home in their region; indeed, half (48%) of non-home owning young family units have less than £1,000 in the bank.

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January 2025 Market Outlook: Navigating the Property Landscape

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January 2025 Market Outlook: Navigating the Property Landscape

As we step into 2025, the real estate market is showing signs of adaptation and resilience amidst changing economic conditions. January traditionally offers a moment to reflect on the previous year’s trends and project what’s ahead. With new challenges and opportunities on the horizon, both buyers and sellers must approach the property market with insight and strategy.

Here’s a look at key factors shaping the 2025 market:

1. Interest Rates: A Balancing Act

Interest rates remain one of the most significant factors influencing the property market. After a series of hikes in 2023 and 2024, many expect a stabilisation in rates through 2025. Central banks will likely be cautious in their approach to avoid stifling economic recovery while balancing inflation concerns. For buyers, this could mean slightly more favourable borrowing conditions than in recent years, though affordability might still be a challenge in many areas.

What does this mean for buyers? 

Lower rates could provide some relief for first-time buyers or those looking to refinance, but it’s essential to act quickly before any future increases. Those with the flexibility to lock in a mortgage rate might benefit from a lower monthly payment than they would have in the past.

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2. Housing Inventory: Tight, but Evolving

One of the ongoing challenges is limited housing supply. In many markets, the number of homes available is still not meeting demand, creating a competitive environment. However, there are signs that inventory levels might slowly rise in 2025, with more homeowners considering selling or moving due to changes in work-from-home policies or a desire for more space.

What does this mean for sellers? 

Sellers who are well-prepared with attractive listings (including professional staging and smart pricing) may find the market still favours them. However, prices may not be climbing at the same rapid pace as in previous years, so pricing strategically will be crucial.

3. Price Adjustments: The Return of Stability

After the extreme price growth of the past few years, many regions are expected to experience price stabilisation or slight corrections. In overheated markets, such as major metropolitan areas, prices may level off as demand normalises. However, suburban and rural areas could still see steady price growth due to migration trends and work-from-home flexibility.

What does this mean for investors? 

Investors should consider markets where they can still find value, especially in areas where long-term growth is expected. Emerging neighbourhoods or up-and-coming regions could offer opportunities for buying properties at a lower cost with strong potential for future appreciation.

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4. Green and Sustainable Homes: The Growing Trend

Environmental concerns and sustainability are becoming central to homebuyer decisions. Many buyers are increasingly looking for homes that offer energy efficiency, green technology, and eco-friendly designs. As this trend continues to grow, we can expect more developers to incorporate sustainable features in new builds and renovations.

What does this mean for builders and developers? 

Builders that focus on sustainability, whether through eco-friendly materials or smart home technologies, will likely have an edge in attracting a more environmentally-conscious market. Homebuyers are becoming more educated on energy consumption and environmental impact, pushing demand for green homes higher.

5. Technology and Virtual Tools: The New Norm

Technology continues to play a critical role in the real estate market, with virtual tours, AI-powered property searches, and digital contracts making transactions smoother. As buyers and sellers become more comfortable with digital tools, expect even more innovation in how properties are marketed and sold. Additionally, virtual staging and augmented reality tools will make it easier to envision potential homes.

What does this mean for real estate agents? 

Agents must keep up with the tech-forward approach, offering clients the ability to explore homes remotely and providing high-quality digital listings. Staying ahead of these trends will give real estate professionals an edge, particularly when working with younger, tech-savvy buyers.

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6. Economic Uncertainty: A Constant Factor

While the market is recovering, uncertainty remains due to global economic factors, including inflation rates, unemployment levels, and geopolitical risks. However, 2025 could see a more balanced economic environment, with efforts to combat inflation and stabilise markets. This may provide a sense of stability for potential homebuyers and investors.

What does this mean for buyers and sellers? 

Both groups will need to remain adaptable and plan for fluctuations in the broader economy. Flexibility in terms of location, financing, and timeline will be important to avoid being caught off guard by any unexpected market shifts.

Final Thoughts

The 2025 real estate market promises to be a year of transition, with a balance of opportunities and challenges for both buyers and sellers. Whether you’re looking to buy your first home, invest in a property, or sell in a competitive market, staying informed and working with a trusted real estate agent will be key to making smart decisions.

As we move further into the year, the key will be adaptability—those who can navigate the shifting landscape and respond to changing market conditions will be in the best position to succeed.

Are you thinking of making a move in 2025? Let’s talk about what opportunities are available in your local market.

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