The UK housing market is set for a year of gradual improvement rather than a boom in 2026, with falling mortgage rates and new lending products expected to support demand while keeping price growth in check.
According to Sam Fox (main picture), Founder of the UK Mortgage Centre, easing borrowing costs and modest income growth should draw more buyers back into the market after a subdued period for transactions.
He reckons affordability is improving, but conditions are a long way from the ultra-cheap money that fuelled the pandemic-era surge.
Fox expects house prices to rise by between 3- and 5% over the year, with wide regional variations. More affordable markets in the North of England, Scotland and Wales are likely to outperform London and the South East, where higher prices continue to limit demand.
FIRST-TIME BUYER HELP
Transaction volumes are also expected to pick up as lenders expand their product ranges, including low-deposit and higher loan-to-value mortgages, helping first-time buyers and movers who have been priced out in recent years.
Fox says:“2026 should be a great year to buy a property. With interest rates dropping and lenders releasing new products to the market, affordability and availability should increase. But I’m not expecting a house price boom or a glut of mortgage rates like we saw a few years ago – the world has significantly moved on.
“Some regions will see stronger growth simply because prices are lower to begin with and demand remains robust. Transaction levels are also expected to rise after a subdued period for sales.”
MORE HOUSE SALES
And he adds: “We will be seeing an increase in house sales compared to the current situation, which has been pretty stagnant. The main driver will be lenders coming to the market with better products that boost the number of potential buyers.
“While rates are expected to fall gradually, inflation remains above the Bank of England’s 2% target, limiting how quickly borrowing costs can come down. Don’t expect rates to fall to anything like they were during Covid, when we saw 0.1%.
“Ultimately, supply and demand will continue to drive prices. For first-time buyers, it’s often better to get onto the ladder sooner rather than wait endlessly for a perfect, affordable home.”
