The dust has finally settled on the Chancellor’s November Budget. After months of speculation regarding capital gains tax hikes and sweeping property reforms, the reality has proved less dramatic than the rumours.
However, the pre-Budget anxiety has undeniably left its mark. Transaction volumes have paused and buyer sentiment has taken a knock as the market digests the new fiscal landscape.
As we look toward 2026, the questionis no longer about what the government might do, but how the market will adapt to what has effectively become a new economic baseline.
It’s my belief that while the headlines focus on national stagnation, the real story for 2026 lies in the widening performance gap between the South East and the regional powerhouses of the North.
YEAR OF RECALIBRATION
The consensus is that 2026 will be a year of recalibration rather than rapid growth. We are moving away from the volatile spikes of recent years into a period where strategy trumps speculation.
The Budget was not the catastrophe many feared, but it has fundamentally altered the mathematics of property investment in the UK.
A SLOW START
We must be realistic about the first quarter of 2026. Uncertainty caused a freeze in decision-making; deals stalled leading up to Christmas as investors waited for the Chancellor.
I expect this hesitancy to bleed into the early months of the new year.
However, look at the fundamentals. Leading forecasts have revised 2026 growth expectations down to around 2%.
This actually represents a stable market that is taking a breather. As interest rates settle, we will likely see a release of pent-up demand from spring onwards. But as activity returns, investors will find that the rules of engagement have changed.
THE END OF VANITY INVESTING
The Chancellor’s Autumn Budget 2025 confirmed the fiscal environment is tightening. While Capital Gains Tax on property remained untouched, the broader tax burden means the era of easy money is over.
From my perspective, the Budget acts as a harsh reality check. Consider a hypothetical investor with £500,000 to deploy.
In the current climate, buying a single, low-yield unit in the commuter belt is difficult to justify. With yields compressing against mortgage rates, the asset often barely washes its face. This squeeze on margins is forcing a geographical rethink.
THE NORTH-SOUTH GAP WILL WIDEN
That same £500,000 capital could secure three units in high-demand Northern postcodes. The maths forces the decision: when margins are squeezed, you cannot afford to hold vanity assets in low-yield regions. You must move capital to where income is robust enough to absorb new costs.
National averages are misleading. A 2% national growth forecast hides the fact that London is stagnating while the North offers value.
Higher entry costs in the South are accelerating the migration of capital northwards. In 2026, I anticipate cities like Liverpool, Manchester and Salford will outperform their southern counterparts.
Take a standard terrace in Liverpool’s L7 postcode versus a flat in Croydon. The entry price is a fraction, but student demand in L7 is recession-proof. Affordability is healthy and tenant demand outstrips supply, particularly in student and professional HMO sectors.
RENTS WILL RISE AS LANDLORDS EXIT
This supply-demand imbalance leads us to the untold story of 2026: the rental market. Tax changes and regulatory pressure are causing smaller landlords to exit the sector. This contraction in supply comes at a time when demand is at historic highs.
Consequently, we will see upward pressure on rents throughout 2026.
For professional investors, this offers protection against softer capital growth with yield being the safety net.
However, this relies on quality. If you think you can buy a tired property and command top-tier rents, you are mistaken. Tenants pay more, but expectations for finish and efficiency have never been higher.
In conclusion, the property market in 2026 will not lift all boats equally. While the national picture suggests modest growth, the regional reality is different.
By focusing on high-yield sectors in the North West and prioritising income over capital appreciation, investors can find significant opportunities in a stable market.
