Housing Market Predictions 2026 UK
If as a property investor last year’s housing market felt like stop start traffic, you weren’t imagining it. Budget uncertainty, high interest rates and nervous buyers made for a bumpy ride. Heading into 2026, things look calmer, but not exactly plain sailing either. These housing market predictions for 2026 UK point to a market that is moving again, just with more caution than confidence.
Since the November financial statement, activity has picked up. Strutt & Parker reported a 173% rise in properties listed between budget day and early December compared with the same period in 2024. Jackson-Stops says pent-up demand is likely to keep momentum going through the early part of the year. That feels encouraging, but buyers are still watching mortgage rates closely.
Mortgage rates in 2026: relief, not a return to the past
Mortgage rates sit at the heart of most property decisions. The Bank of England’s December rate cut brought the base rate down to 3.75% and raised hopes that borrowing might get cheaper again.
Rachel Springall from Moneyfacts said, “All signs are looking encouraging for the mortgage market to thrive moving into 2026.” That said, most analysts are urging restraint. AJ Bell and Savills both expect only one or two further base rate cuts this year as inflation continues to bounce around above the 2% target.
Savills forecasts a base rate of 3.5% by the end of 2026, falling to 3% in 2027. In practical terms, that suggests the very lowest mortgage rates could edge down to around 3% by the end of the year, from roughly 3.51% today for a two-year fixed deal with a 40% deposit.
This slow decline will frustrate many. Around 1.6 million homeowners will come off fixed-rate deals in 2026, including 600,000 who secured ultra-low Covid-era rates. As AJ Bell’s Danni Hewson puts it, borrowers will need to adapt to a new normal rather than expect the old one to return.
Regional shifts as the north-south divide narrows
One of the clearest UK property outlook trends is regional. Cheaper prices, lower stamp duty and stronger yields helped northern regions outperform in 2025. Hamptons recorded a 5% rise in Scotland and 3.5% growth in the northeast and northwest, while London saw no growth at all.
Nationwide now says homes in northern England are worth 58% of those in southern regions, up from 48% in 2017. That narrowing gap suggests value is being squeezed and buyers are getting more selective.
Lloyds named Plymouth the UK’s fastest-growing hotspot, with prices up 12.6% to £278,808. Meanwhile, areas as different as Newcastle’s NE7, Basingstoke’s RG22 and Chessington’s KT9 all saw more than 70% of homes under offer. In 2026, affordability pockets matter more than postcodes with prestige.
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London moves slowly, prime property struggles
London remains a mixed picture. Affordability continues to cap growth, although southeast London has become one of the UK’s most popular moving destinations. First-time buyers are still active, but value-led areas like Croydon and Thurrock are doing the heavy lifting.
At the top end, the new mansion tax on homes over £2 million, due from 2028, is already influencing behaviour. Government estimates suggest it could knock 2.5%, or £50,000, off a £2 million property. Savills reports that traditional prime London neighbourhoods are still 24.5% below their 2014 peak.
A faster way to buy a home?
One of the most significant changes coming is not about price at all. The government plans to overhaul the homebuying system in England and Wales, moving closer to the Scottish model.
Sellers would provide property information upfront and accepted offers would become legally binding. This aims to cut gazumping, gazundering and wasted costs. Santander’s David Morris said the focus is on digitisation and giving everyone “the same version of what’s going on”. If delivered properly, it could reduce delays and stress for buyers and sellers alike.
First-time buyers step forward
Despite higher stamp duty and no replacement for Help to Buy, first-time buyer trends in 2026 look surprisingly strong. Savills reports £82.8 billion of mortgage lending to first-time buyers in the year to September 2025, up 30% year on year.
Slower rent rises are helping deposits grow, while family support continues to play a role. For many, buying still feels stretched, but renting no longer looks like the safer option it once did.
So, should you buy property in 2026?
These housing market predictions for 2026 UK suggest a steadier market rather than a booming one. Mortgage rates are easing, choice is improving and confidence is returning, but affordability remains tight and regional differences matter more than ever.
For anyone thinking about investing in property in 2026, understanding the risks, the borrowing environment and the wider market context is key. There are opportunities, but patience and preparation still count.
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