Following a resilient year for property, industry experts predict house price increases of between 1% and 5% in 2026.
Earlier this month, we reported how, according to the HM Treasury UK House Price Index for September 2025, house prices had fallen by 0.6% between August and September, and risen by 2.6% compared to last year.
Indeed, despite Interest Rates remaining significantly higher than their pre-COVID lows, and house prices demonstrating modest growth, demand for property has remained strong.
According to HMRC (1), the provisional seasonally adjusted estimate of the number of UK residential transactions in September 2025 was 95,980, 4% higher than September 2024 and 1% higher than August 2025.
Taking into account key performance indicators across the market, the outlook has been broadly positive for the UK property industry throughout 2025.
This sentiment is shared by Nationwide’s Chief Economist, Robert Gardner, in the lender’s Price Review and Outlook for 2026. (2)
“The word that best describes the housing market in 2025 is ‘resilient’. Even though consumer sentiment was relatively subdued, with households reluctant to spend and mortgage rates around three times their post-pandemic lows, mortgage approvals remained near pre-COVID levels,” Gardner said.
“Stamp duty changes that took effect at the beginning of April created volatility through the spring and summer. Activity spiked in March as purchasers brought forward transactions to avoid paying additional tax, and this led to some softness in the following months. However, the underlying picture was little changed as demand held up well throughout,” he continued.
“House prices evolved broadly in line with our expectations. Annual price growth slowed steadily from 4.7% at the end of 2024 to 2.1% in the middle of 2025 and then to 1.8% in November. As a result, prices were close to the all-time high recorded in the summer of 2022 as the year drew to a close.”
Moving ahead into 2026, it is widely expected that house prices will continue to improve, with Nationwide suggesting that prices could grow by as much as 4% during the year.
“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,” Gardner elaborated.
“The changes to property taxes announced in the Budget are unlikely to have a significant impact on the market. The high value council tax surcharge is not being introduced until April 2028 and will apply to less than 1% of properties in England and around 3% in London. The increase in taxes on income from properties may dampen buy-to-let activity further and hold down the supply of new rental properties coming onto the market, which could in turn maintain some upward pressure on private rental growth.”
While this represents good news for homeowners, other lenders predict more modest increases in house prices next year.
Halifax, for example, suggests that house price growth could be closer to between 1% and 3%. (3)
“While affordability remains challenging, the picture has improved compared to recent years, driven by a combination of above-inflation wage growth, lower interest rates and some expansion of eligibility criteria from mortgage lenders,” said Halifax Head of Mortgages, Amanda Bryden.
“For those taking their first steps onto the property ladder, monthly mortgage costs as a share of income are now at their lowest level since 2022, with the rate on a typical two-year first-time buyer mortgage (90% LTV) dropping by roughly 0.8 percentage points over the last year,” she added.
“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 homebuyers’ purchasing power.”
Analysis from Nationwide suggests that regional differences continue to play a significant role in determining house price growth.
“Annual house price growth in Northern Ireland outpaced the rest of the UK by a wide margin, averaging 11% in the first nine months of the year, almost four times faster than the 3% recorded in the UK as a whole and more than double the 5.1% recorded in the next strongest performing region (the North of England), Gardner said.
“London was the weakest performing region in the first nine months of the year with annual growth averaging 1.3%. This was part of a wider trend that saw house price growth in the northern regions of England outpacing the southern regions. As a result, the price differential narrowed to its lowest since 2013. The average price of a home in northern regions of England is now almost 58% of that in the southern regions, well above the lows of 48% seen in 2017.”
Furthermore, according to ONS (4), the provisional average house price in Manchester in September 2025 was £254,000. This was higher than the average of £245,000 in September 2024 (revised), a 3.5% rise.
Across the North West, the average house price in September 2025 was £215,000, which was 3.3% more than a year earlier (£208,000).
In terms of demand, the Royal Institution of Chartered Surveyors (RICS), recently reported that despite an overall fall in New Buyer Enquiries, respondents to its UK Residential Market Survey, November 2025, reported a marked increase in buyer interest in the North West.
This trend has endured throughout 2025, cementing the North West’s reputation as a ‘property powerhouse’, full of lively opportunities for both buyers and sellers.
With the Chancellor’s Autumn budget having a softer-than-anticipated impact on the property market, and a healthy demand from buyers (particularly in Northern regions), conditions appear to be ideal for homebuyers ahead of the expected Boxing Day rush in property enquiries.
Changes to rental and property income tax rules are expected to bring about a flurry of activity in the market over the coming months. Previous changes to rental rules have pushed some landlords to divest their assets or even exit the rental market altogether, while other savvy investors have moved to take advantage of the availability of stock.
This trend has also seen first-time buyers enquire into former rental properties, in both traditional markets and at auction sales, so a fresh round of landlord sales will only increase this activity.
Although many commentators have been quick to observe the resilience of the property market, caution has been the other watchword for buyers in recent months.
The run-up to the Autumn Budget led buyers to take a ‘wait and see’ approach, which has, in part, eased following the Chancellor’s announcements.
Of course, all eyes will continue to remain on Interest Rates over the coming months, but with lenders feeling confident about the coming year, buyers will likely also feel emboldened.
This is good news for sellers, but also an indicator that acting quickly is key to getting ahead in a competitive market.
With buyer activity traditionally spiking on Boxing Day and into the New Year, now is the time to act for sellers who want to sell quickly and for a good price, before a busy market makes it harder to find the right buyer against a backdrop of fierce competition.
If you’re thinking of selling during 2026, now is the time to act to ensure that your home is ideally placed to take advantage of the New Year rush in buyer activity, as well as increasingly favourable market conditions throughout the year.
Getting ahead of a busy market will ensure that your home has the best possible chance of selling quickly ahead of your onward move – meaning that you don’t miss out on purchasing your dream home.
To discuss selling your home, book a free valuation, or learn more about potential selling strategies, contact your nearest Edward Mellor branch today using the link below.
(1) – HM Revenue & Customs UK monthly property transactions commentary
(2) – Nationwide Price Review and Outlook for 2026
(3) – UK house prices set to grow 2-4% in 2026, says Nationwide
(4) – ONS – Housing prices in Manchester
Related Pages
