As 2026 begins in earnest, the perennial question for buyers and sellers alike remains: What is likely to happen with house prices this year?
2025 was clearly a mix of two halves for the housing market. The first half saw uncertainty surrounding the April stamp duty changes and a spring rush to buy followed by a return to a more resilient market.
By autumn, nervousness around changes rumoured in the November budget had begun to prompt lower prices as buyers became more cautious and stayed away. Sellers cut prices in response. By December average new seller asking prices had fallen by 1.8% over the month to £358,138, finishing the year 0.6% lower at the end of 2025 than in 2024, according to Rightmove.
Hope ahead
But things look more positive for 2026. Buyer affordability continues to improve as wages rise, and affordability is now at its strongest in more than a decade. Mortgage rates also continue to decline, with the average two-year fixed rate 4.33% according to Rightmove. This compares to 5.08% last year.
Interest rates should also continue to decrease. In December, the sixth cut since August 2024 took the base rate to 3.75% and further cuts are expected this year. However, the Bank of England’s Monetary Policy Committee has admitted that although a “gradual downward path” is likely to continue, judgements around further cuts will be a “closer call”.
Growth expected
This combination of factors means that further price growth is forecast by experts, albeit on a limited scale. Rightmove predicts house price rises of 2% in 2026 as rising average wages and more relaxed lending criteria result in a rebound in buying activity in early 2026.
The view is shared by other house price index forecasts, which also suggest that despite a slowdown in growth positive sentiment will continue, with first-time buyers particularly eager to buy. According to Zoopla, first-time buyers made up 39% of all home purchases in 2025 and the company predicts that prices will rise by 1.5% across the year, with 1.18 million sales anticipated.
Nationwide, meanwhile, is a little more optimistic. After recording a slowing of UK house price growth to 0.6% in December, it predicts annual house price growth to be broadly in the 2 to 4% range in 2026. This is, it says, due to a number of factors. As well as the further improvements in affordability as income growth outpaces house price growth and interest rates decline, Nationwide says that other influencing factors – such as the high value council tax surcharge – won’t impact the market in 2026 and also has a limited range, applying to less than 1% of properties in England.
What to do
Alongside the anticipation of further house price growth, however, must come a continued acknowledgement of the need for realistic pricing to secure a sale. As conditions improve, more sellers will be enticed to come to market. The increased availability of stock will continue to mean that buyers largely have the upper hand. Competitive pricing will remain key.
For information on how we can assist you on your sales journey, please contact one of our branches in Essex, London or Hertfordshire today. We also offer a free and instant online valuation to give you an idea of how much your home could be worth on the current market.
