Forecasting House Prices in the UK for 2026.
- Lubomir Trizuliak, MA, MBA
- Dec 25, 2025
- 4 min read
The UK housing market has long been a topic of interest for homeowners, investors, and policymakers alike. As we approach 2026, many wonder what the future holds for house prices across the country. Will prices continue to rise, stabilize, or fall? Understanding the factors shaping the market can help buyers and sellers make informed decisions. This article explores the key trends and forecasts for UK house prices in 2026, backed by recent data and expert analysis.
Current State of the UK Housing Market
In recent years, the UK housing market has experienced significant fluctuations. After a period of rapid growth, house price increases slowed down in 2023 due to rising interest rates and economic uncertainty. According to the UK Land Registry, the average house price in England reached approximately £280,000 in late 2023, showing a modest annual increase of around 2%. Scotland, Wales, and Northern Ireland have seen similar trends, with regional variations.
Several factors have influenced this slowdown:
Higher mortgage rates making borrowing more expensive
Economic concerns including inflation and wage stagnation
Government policy changes affecting stamp duty and housing supply
Despite these challenges, demand remains strong, especially in urban areas and commuter towns.
Key Drivers Affecting House Prices in 2026
Looking ahead to 2026, several elements will shape the trajectory of house prices in the UK:
Interest Rates and Mortgage Availability
The Bank of England’s monetary policy will play a crucial role. If interest rates remain high or rise further, mortgage costs will increase, potentially reducing demand. Conversely, if rates fall, borrowing could become more affordable, boosting buyer activity.
Housing Supply and New Builds
The UK has faced a long-standing shortage of homes. Government initiatives aim to increase new housing construction, but progress has been slow. By 2026, any significant rise in supply could ease price pressures, especially in high-demand areas.
Economic Growth and Employment
A stable or growing economy supports house price growth. Employment levels, wage growth, and consumer confidence will influence buyers’ ability to enter the market or upgrade their homes.
Regional Differences
House price trends will not be uniform across the UK. London and the South East often lead price changes, but affordability issues may shift demand to northern cities and smaller towns. For example, cities like Manchester and Leeds have seen strong growth due to improved infrastructure and job opportunities.
Forecasts for House Prices in 2026
Based on current data and expert forecasts, the following trends are expected:
Moderate price growth nationally: Average house prices may increase by 1% to 2% annually (asking price), reflecting steady demand balanced by supply constraints. But will be decrease the real offered price (land registry data).
Stronger growth outside London: Regions such as the North West and Midlands could see higher increases, possibly 6% or more, as buyers seek more affordable options.
Slower growth or stabilization in London: High prices and economic factors may limit growth to 1% to 2% annually.
Continued demand for rental properties: Rising house prices and mortgage costs could push more people toward renting, impacting the rental market.
I believe the key aspect would be the interest rate of The Bank of England. The current base rate is 3.75%, following a reduction from 4% on December 18, 2025. This marks its lowest level since early 2023 and indicates a possible easing of borrowing costs as inflation moves towards the 2% target. Additionally, geopolitical situations will play their own role, such as the US as a main policy maker, the new Chair at the FED, government borrowing, stock market, unemployment data, growth of economy. This all things mentioned will impact people's sentiment on the UK housing market.
Forecasting House prices in UK 2026 from big UK's players
Property expert predict that new seller asking prices will rise by 2% by the end of 2026
House price growth will differ depending on region, with lower-priced Scotland, Wales and northern England markets expected to see stronger growth, whilst London house prices could lag behind
It’s a more positive year for first-time buyers, thanks to a good choice of available homes, improving affordability and lower mortgage rates lower than 2025
Based on the ONS House Price Index, we forecast a 2.5% rise across Great Britain in Q4 2026, with the Midlands and North leading the charge thanks to stronger affordability.
Hamptons forecasts that transaction volumes are likely to hold steady at around 1.15 million in 2026, with improving affordability balancing ongoing economic and tax pressures.
Practical Tips for Buyers and Sellers in 2026
Whether you plan to buy or sell a home in 2026, understanding market conditions can help you make better choices:
For Buyers
Get mortgage pre-approval early to lock in rates and understand your budget.
Consider emerging regions where prices may be more affordable and growth potential higher.
Factor in additional costs such as stamp duty, legal fees, and maintenance.
Stay informed about government schemes that support first-time buyers or home improvements.
For Sellers
Price your property competitively based on recent local sales and market trends.
Invest in minor renovations to increase appeal and value.
Be prepared for longer selling times if interest rates remain high.
Work with experienced agents or consultants who understand your local market.
What This Means for the UK Housing Market
The UK housing market in 2026 is likely to be characterized by steady but moderate price growth, influenced by economic conditions, interest rates, and supply factors. Regional differences will become more pronounced, with some areas offering better value and growth prospects than others.
For buyers, this means opportunities exist outside traditional hotspots, while sellers should focus on realistic pricing and property presentation. Policymakers will need to continue addressing housing supply challenges to ensure affordability and market stability.
Staying informed and flexible will be key for anyone involved in the UK housing market as 2026 approaches.
Author: Lubomir Trizuliak, MA, MBA , Founder at key4you
Comments