Key Takeaways
- Mortgage lenders say first-time buyers are poised to benefit from cheaper deals, rising wages and looser lending criteria.
- One house price index already shows a strong start to 2026, but data for the end of 2025 is mixed.
- Property taxes introduced at the Autumn Budget are leading to sales among professional investors, freeing up housing stock.
With mortgages expected to get cheaper this year as interest rates fall, UK house prices are expected to show modest growth in 2026. This follows a dip at the end of 2025 after the chancellor, Rachel Reeves, raise property taxes for those owning high-end houses.
Lenders, property portals and estate agents are forecasting a range of house price increases, from 1% at the low end to 4% at the top end of the range.
UK House Price Forecasts for 2026: What the Experts Predict
- Halifax expects prices to rise between 1% and 3% this year. The lender has described the outlook as steady rather than spectacular.
- Nationwide is slightly more upbeat, forecasting growth of 2% to 4% in 2026. It says improving affordability should help support the market.
- Rightmove’s latest data shows the market has started the year strongly, with a 2.8% jump in asking prices in January, the largest increase for that month on record.
- Zoopla has the lowest forecast for the year, predicting a 1.5% rise in prices.
- Savills expects UK house prices to rise by around 2% in 2026, and has revised its longer-term forecast to predict nearly 25% cumulative growth by 2030.
Cheaper Mortgages Hold the Key to UK House Prices
Mortgage affordability is one key driver of demand and potential price increases. And that depends on the future path of interest rates, which set variable rate mortgages.
With four interest rate cuts in 2025, taking the base rate from 4.75% to 3.75%, those on standard variable rates or tracker mortgages have benefited the most. The Bank of England is predicted by futures markets to cut interest rates once this year, but bond fund managers at Jupiter are expecting four rate cuts.
Those taking out two and five-year fixed mortgages face different dynamics as these products are priced off sterling interest rate swaps.
According to Moneyfacts’ average mortgage rate data from Jan. 23, 2026, the average UK mortgage rate is currently 4.91%, slightly higher than a month prior, when it sat at 4.87%. Average two-year and five-year fixed rates of 4.86% and 4.94% also show slight increases from 4.83% and 4.90%, respectively.
“Best buy” deals may be cheaper: According to MoneySavingExpert data on Jan. 30, the lowest tracker mortgage for a first-time buyer offers an interest rate just below 4%, with a two-year fixed rate available for 3.50%. A five-year fixed rate mortgage is available for 3.72%.
Still, many homeowners are still coming off fixed-rate mortgages taken out at a time of low interest rates and having to remortgage at higher rates, restricting how much people are prepared to borrow.
Is Now a Good Time to Buy a UK Property?
Falling interest and mortgage rates mean now may be a relatively good time for first-time buyers to get on the housing ladder, experts say. Buy-to-let landlords are exiting the market as property taxes rise, they say, handing opportunities to buyers.
“If mortgage rates continue to improve, this will deliver a boost to affordability levels, though buying activity at the upper end of the market may remain subdued, in anticipation of the high value council tax surcharge coming into force in April 2028,” says Alice Haine, personal finance analyst at Bestinvest.
Halifax is also positive about the prospects for first-time buyers in 2026.
“While affordability pressures persist, the house price to income ratio was at its lowest in over a decade in December, striking a positive note for those looking to purchase their first home.”
Nationwide’s chief economist Rob Gardner says the economic backdrop of rising wages and falling interest rates was supportive for house prices in 2025.
“With price growth well below the rate of earnings growth and a steady decline in mortgage rates, affordability constraints eased somewhat, helping to underpin buyer demand,” he says.
This is helpful for new entrants to the market.
“The first-time buyer share of house purchase activity was above the long-run average, supported by easier credit availability,” he adds.
What Happened to UK House Prices in 2025?
Investors and homebuyers trying to ascertain the current market mood still have to piece together a patchwork narrative of data.
The index price data is complicated by the lag between slower “official” figures showing actual sales prices and those produced by lenders based on mortgage approvals.
The freshest numbers come from property portal Rightmove, which has just published a January update of its house price index. This showed a 2.8% increase on December’s figures—the largest ever price increase in the month of January and the largest of any month since June 2015.
Halifax and Nationwide data for December, which reflects mortgage approvals, was more mixed, but show the potential impact of the Nov. 25 budget changes. Halifax’s index shows a fall in prices in the last month of the year, but Nationwide shows a gain.
According to Halifax, prices dipped by 0.6% in December, while Nationwide’s house price index shows 12-month UK house prices growing by 0.6% in December 2025 from 1.8% in November, the slowest pace of growth since April 2024.
Halifax says this drop-off at the end of the year should be temporary: “While December’s monthly fall in prices was likely related to uncertainty in the latter part of the year, this should now be starting to unwind.”
The official HM Land Registry figures cover November. According to the latest data November 2025 saw a rise of 0.3% month over month and 2.5% year over year. Government house price figures for the full year are due on Feb. 18, 2026.
