Experts issue verdict on potential winners and losers in 2026 housing market
Real estate experts expect the housing market to get off to a strong start in 2026, driven by falling mortgage rates and reduced uncertainties.
The recovery is predicted to be “bottom-up” rather than “top-down”; There are challenges at the top end, but first-time buyers remain the “driving force” on the property ladder.
December’s cut in the base rate from 4 percent to 3.75 percent offered some mortgage holders an early Christmas present.
This is important as UK Exchequer figures show around 1.8 million fixed-rate mortgages will expire in 2026. In last year’s “seesaw” market, buyers rushed to beat the stamp duty deadline in its early months.
According to HM Revenue and Customs (HMRC) figures, there were around 177,370 home sales across the UK in March 2025; this number was nearly double (104%) compared to the 86,810 sales recorded in March 2024.
However, in the second half of the year, some activities were suspended as some potential buyers took a break due to speculation about possible changes to the autumn budget.
The Royal Institution of Chartered Surveyors (Rics) previously reported that the volume of new home purchase inquiries fell to the weakest level in nearly two years in November.
Some buyers entering the market now may find they can negotiate more than they did a few months ago. The average asking price for a house in Britain fell by £6,695 month-on-month in December to £358,138, according to property website Rightmove.
Rightmove property expert Colleen Babcock said: “We predict the market will look and feel very different depending on which part of Great Britain you are in and the type of property you are looking to sell or buy – there are particularly big differences between the south of England and the rest of Great Britain.”
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He said market conditions in 2026 “will typically favor first-time buyers over those at the top end of the market.”
Zoopla Chief Executive Richard Donnell said: “We expect a stronger-than-usual recovery in activity in 2026 (in the first quarter) as a result of the large decline in activity ahead of the November Budget, with many buyers delaying their home-buying decisions.”
He said December’s base rate cut “will boost market sentiment as we head into the new year, which will support increased market activity levels – which will support home move demand and overall sales volumes rather than leading to a rise in house prices.”
Mr Donnell predicted: “First-time homebuyers will continue to be the driving force of the market, accounting for two in five home purchases.”
He predicted that the “North-South divide” in house price growth would continue into 2026 and that this would “reflect the affordability of homes”.
House price growth in parts of northern England is outperforming parts of London and some southern areas, where house prices are often significantly higher.
Mr Donnell said: “Homeowners looking to move in 2026 need to understand the value of their home before making an offer on a new home, which is the most important thing for southern England.”
Looking at transactions, UK Finance said it expects around 1.20 million home sales to take place in 2026 and 2027, up from 1.21 million in 2025.
But UK Finance said despite “welcome adjustments” to credit regulations in 2025, affordability remained very tight and could limit borrowing options for potential buyers in 2026.
The Financial Conduct Authority (FCA) has drawn up plans to look in more detail at how access to mortgages could be improved, potentially helping groups such as first-time buyers and the self-employed.
Amanda Bryden, chief executive of Halifax Mortgages, said: “Looking ahead to 2026, we expect house prices to rise modestly between 1 per cent and 3 per cent.
“While wage growth is expected to slow and unemployment to rise further, lowering interest rates and reducing inflation will help to gradually improve the purchasing power of home buyers.”
Robert Gardner, chief economist at the Nationwide Building Society, said in 2025: “Annual house price growth in Northern Ireland has outpaced the rest of the UK by a wide margin, averaging 11 per cent in the first nine months of the year, almost four times faster than the 3 per cent recorded in the UK as a whole and more than double the 5.1 per cent recorded in the next strongest performing region (Northern England).”
He added: “Wales has largely caught up with the wider trend in the UK in 2025, while Scotland has seen a marginally stronger rate of house price growth.
“London was the weakest performing region in the first nine months of the year, with average annual growth of 1.3 percent.
“This was part of a wider trend in which house price growth in northern parts of England was outpacing southern areas.”
Mr Gardner said of the coming year: “We expect annual house price growth to remain generally in the 2 to 4 per cent range.”
In the Budget, the Government announced a high-value council tax surcharge for homes over £2 million in England from April 2028.
Mr Gardner added: “The high-value council tax surcharge will not be introduced until April 2028 and will apply to less than 1 per cent of properties in England and around 3 per cent of properties in London.”
Lucian Cook, head of housing research at Savills, said: “Our mainstream house price forecast sees average house prices rising by 2 per cent, or £7,200, in 2026, given some challenges at the top end of the market, with this increase expected to be a bottom-up rather than a top-down recovery.”
Mr Cook added: “More affordable end-of-season markets in the North, Scotland and Wales are expected to continue the strongest performance, while price growth in London and the South is likely to remain weaker due to greater affordability challenges.”
While the top end of the housing market is expected to remain price sensitive in 2026, Mr Cook said “pragmatism will remain key to achieving successful prime sales in 2026, creating opportunities for well-informed, realistic buyers and sellers”.
Nick Leeming, president of Jackson-Stops, said the seasonal “spring bounce” typically seen in the housing market “should be more pronounced than the long-term norm.”
He said: “After almost six years of extraordinary volatility driven by Covid, financial shocks and political uncertainty, 2026 is now expected to mark a return to a more stable and recognizable housing market.”
As housing market activity accelerates in 2026, home buyers are reminded to pay attention to the quality of the property they choose.
Emma Toms, chief executive of New Homes Quality Board, said: “Any suggestion that home buyers will re-enter the market in 2026 would be welcome news for the construction industry and the wider economy.
“But periods of increased demand can put pressure on developers to build quickly, so if we want to ease the housing crisis and ensure uptake of new-build homes is strong, we must absolutely ensure quantity never comes at the expense of quality or customer service.
“Through our industry code and the oversight of the New Homes Ombudsman Service, we set clear rules for housebuilders, driving improvements in conduct and providing buyers with a way to remediate if the standards set out in the code are not met.”
