UK house prices edged back into positive territory during the first quarter of 2026 according to the latest Property Market Index Review from London estate agency Benham and Reeves, although widening pricing gaps suggest buyers remain cautious amid ongoing economic uncertainty.
The index, which combines data from Halifax, Nationwide, Rightmove and the UK House Price Index to provide a broader view of market performance, found the average UK house price stood at £305,092 in Q1 2026.
That represented quarterly growth of 0.3%, reversing the 0.5% fall recorded during Q4 2025. On an annual basis, UK house prices were 0.7% higher than a year earlier.
London also returned to quarterly growth after two consecutive quarterly declines. The average London house price increased by 0.6% during Q1 to £584,690, although values remain marginally down year-on-year at -0.5%.
BORROWING COSTS
The figures come as the wider housing market continues to adjust to higher borrowing costs, affordability pressures and weaker transaction levels following the end of temporary stamp duty incentives last year.
Benham and Reeves’ analysis also highlighted a growing disconnect between seller expectations and buyer affordability.
Across the UK, the gap between the average mortgage-approved purchase price (£286,729) and the average asking price (£369,028) widened to 28.7% during Q1, ending three consecutive quarters in which the gap had narrowed.
At the same time, the gap between asking prices and achieved sold prices also widened nationally, with average sold prices sitting 27.3% below asking prices.
In London, however, the market showed slightly greater alignment. The gap between mortgage-approved prices and asking prices narrowed for a third consecutive quarter to 26.5%.
MEASURED RECOVERY
Marc von Grundherr (main picture), Director of Benham and Reeves, says: “The first quarter of 2026 has seen the property market regain some composure following the slight loss of momentum observed at the end of last year, with house prices across both the UK and London returning to positive quarterly growth.
“While the pace of recovery remains measured, the fact that values have stabilised and started to edge upward again demonstrates the underlying resilience of the market.”
He added: “However, the widening gap between asking prices and achieved sold prices indicates that buyers are still exercising caution and remain highly price sensitive. As a result, realistic pricing continues to be absolutely critical when it comes to securing a successful sale.”
