Our 2026 UK House Price Predictions
Key takeaways:
- Our property experts 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
The UK housing market looks set to improve in 2026, with more people likely to make their move and house prices showing modest growth. Affordability is improving, and buyers and sellers are making new plans following the tax changes announced in the Budget.
Your experience of the housing market next year will depend heavily on where you live and what type of property you’re dealing with; lower priced areas will see more movement, whilst higher priced regions may feel the effects of the Budget changes.
Some first-time buyers could take advantage of 2026 market conditions due to a good choice of available homes for sale, average wage growth outpacing property prices and lower mortgage rates. Meanwhile, the introduction of a mansion tax coming into place in 2028 is likely to create a sluggish top-end of the market next year.
What will happen to house prices in 2026?
Our house price predictions for 2026 suggest that new seller asking prices will rise by 2% by the end of the year. While this represents positive growth, it also reflects a market finding its balance after a few years of economic uncertainty and a quieter market at the end of 2025.
Buyer affordability
Buyer affordability should increase throughout 2026. Mortgage lenders have been looking at ways to loosen their lending criteria to help people responsibly borrow more. We predict that the increased spending power buyers have will boost property prices slightly. However, house price growth will remain behind average wage growth and inflation, making homes more affordable in real terms.
Post-Budget recovery
Our survey of over 10,000 potential movers showed one in five were waiting to see the outcome of the Autumn Budget before resuming their moving plans. Many of these “Budget-pausers” are expected to become “Boxing Day-bouncers” as they start planning their move now the uncertainty has cleared.
Colleen Babcock, Rightmove’s property expert, says: “I think next year will be a mix of some key property market themes continuing, and other new trends emerging. We expect many of those who put their moving plans on hold over the last few months will pick them back up again from Boxing Day and into the new year, now the Budget is out the way.”
Our forecast is based on our own data covering more than 90% of the market and uses a house price predictive model powered by millions of supply, demand, and pricing data points. Insights from estate agents and a panel of Rightmove experts are also included to bring more clarity about the impact of recent economic or policy changes.
How will the economy impact house prices in 2026?
Interest rates improving
The Bank of England’s Base Rate decisions will continue to influence mortgage costs throughout 2026. Market expectations suggest we’ll see further rate cuts next year, which should help mortgage rates edge lower.
Inflation stabilising
Inflation affects everything from building materials to household running costs. As inflation continues to stabilise, this should support steady, sustainable growth in the housing market rather than the sharp price movements we’ve seen in recent years. With house price growth expected to remain below inflation, homes are becoming more affordable in real terms.
Wage growth improving affordability
People’s incomes are expected to grow faster than property prices in 2026, which will gradually improve the balance between earnings and housing costs. This is particularly beneficial for first-time buyers working to save their deposits.
Government policy and taxes that impact housing
The Autumn Budget introduced several changes that will affect the housing market longer term. The new mansion tax on homes worth more than £2 million will impact the top end of the market from April 2028.
Meanwhile, the 2% increase in income tax on rental income for landlords comes into effect in 2027 – this could influence the rental market and potentially affect some would-be first-time buyers. Whilst these policy changes don’t come into force next year, we expect buyer and seller behaviour will change beforehand.
House price predictions 2026: Regional breakdown
Next year, we expect to see particularly strong regional variations in house prices, based on Britain’s hyper-local market trends.
Scotland, Wales and northern England are forecast to perform more strongly than other areas. Better affordability in these regions, combined with a healthier balance between supply and demand, should support more resilient price growth.
London and southern England prices are expected to lag behind the rest of the country. These areas are still adjusting to the stamp duty changes that came into effect in April 2025. London house price predictions suggest slower growth than other parts of the country – this is partly because the upcoming mansion tax will disproportionately affect the capital and the south of England.
| Region | House price predictions |
|---|---|
| UK | +2% |
| London | +1% |
| Scotland | +3% |
| Wales | +3% |
Colleen adds: “We predict the market will look and feel very different depending on which area of Great Britain you’re in, and the type of property you’re looking to sell or buy, with big differences particularly between the south of England and the rest of Great Britain. I also think the market conditions next year will favour typical first-time buyers over those at the top-end of the market.”
How will the 2026 housing market be for first-time buyers?
First-time buyers may have a better shot at getting on the property ladder next year, as several factors work in their favour.
There will be plenty of homes on the market in the new year, which means first-time buyers have more options and can negotiate harder on price. Affordability is also set to improve, with average wage growth outpacing house price growth and changes to Loan-to-Income ratios meaning lenders can lend more. We’re entering 2026 with lower mortgage rates compared to 2023, 2024 and 2025, which also helps make monthly payments more manageable.
However, these more favourable conditions don’t remove all the challenges. Many will likely still rely on help from family to reach their deposit, and mortgage rates remain much higher than they were at the start of the 2020s, despite the downward trend.
Will house prices go up for first-time buyers in 2026?
Yes, our experts predict that house prices will go up by 2% nationwide in 2026, with regional variations at play. That said, buyer affordability will also improve, with average wages growing faster than the house price increases and better mortgage rates than in previous years. It will be a buyer’s market in 2026, with a good choice of homes for first-time buyers and more negotiation power.
Who will find the UK housing market more challenging?
Home movers at the very top end of the market will face the greatest challenges over the next few years.
The new mansion tax announced in November’s Budget means that from April 2028, owners of homes valued at £2 million or more will pay an annual charge. Properties over £2 million will incur a £2,500 charge, rising to £7,500 for homes valued at £5 million or over.
Because the tax recurs annually, there are long-term implications for both existing owners and potential buyers. As people may adjust their plans to prepare for this change, we’re likely to see some sluggishness at the very top end of the market next year, with new patterns emerging as buyers and sellers respond.
However, this affects only a small slice of the wider market. Around 1% of homes are priced above £2 million, with less than 0.5% of sales taking place in this price bracket. The tax will hit London and the south of England housing market the hardest. Property values run higher in these areas, and more homes sit in the affected price brackets.
As a result, some sellers may drop their asking price to sit just under the £2 million mark or cut it by enough to cover what their buyer would pay annually. We’ll be watching closely to see how the market responds.
What will happen with mortgage rates in 2026?
Since publishing our December House Price index, there has been more activity with mortgage rates due to the surprise drop in UK inflation reported this week and the expected Base Rate cut, announced today by Bank of England. With the Base Rate now at 3.75% going into 2026, the market for mortgages is looking more positive than it did this time last year.
With the latest inflation drop, we could expect to see at least one more round of rate cuts early next year, but this is more likely to be reflected on 2-year fixed mortgage products.
Our mortgages expert, Matt Smith, says “Markets are anticipating one mortgage rate cut in 2026, with a 50/50 chance of a second later in the year. Today’s lower-than-expected inflation figures suggest we could see further reductions in the New Year, particularly for two-year fixed rates.”
Current market trends suggest the gap between two-year and five-year fixed rates will continue to grow, after two-year rates overtook five-year rates as the cheaper option in 2025 for the first time since the Autumn of 2022.
However, the direction of rates does depend on a lot of variables which can change quite quickly throughout the year. Ultimately, the type of mortgage rate you can expect to see depends on your circumstances.
If you’re looking to move next year, you can keep track of the latest rates on our current mortgage rates page, which we update daily.
Planning your move in 2026
Whether you’re thinking of buying or selling next year, we’ll keep you informed on the latest house price trends so you can prepare for the market.
Our House Price Index is published monthly and tracks asking price movements and new homes coming to the market across the country. If you’re a first-time buyer, make use of our buyer guides and mortgage calculator tools to understand what you can afford to buy and plan how to get started next year.
Tips for sellers in 2026
For those looking to sell a home in 2026, our expert’s advice is to price realistically from the start. With better choice of homes available for buyers, competitive pricing will be essential to secure a sale. Keep an eye on the sold prices in your area, to get a clear view of what your home could sell for. Use our online valuation tool to understand your home’s current value, or our remortgage and stamp duty calculators to see what you can afford.
With modest price growth expected, good choice for buyers and mortgage rates slowly declining, 2026 could be a good year to make your move.
