The sharp rise in January asking prices suggests the housing market feels more balanced than it has for some time but that calm shouldn’t be confused with clarity.
Recent reductions in the base interest rate and a period of price stabilisation have eased some of the immediate pressures that have dominated over the last couple of years, helping buyers and sellers to return to the market.
What is emerging is not a single, unified market, but one where different segments are moving in very different directions – and at very different speeds.
Lower borrowing costs and stabilising prices are helping to drive renewed interest for family homes, particularly across West and South West London.
SOFTENING UNCERTAINTY
For many households, the decision to move had less to do with desire and more to do with uncertainty. As interest rates have eased, and prices stopped falling, that uncertainty has begun to soften.
Buyers are no longer trying to second-guess short-term market movements. Instead, they are making pragmatic decisions based on long-term priorities, such as space, schools, transport links, and overall liveability and quality of life.
This shift away from short-term thinking towards longer-term planning is one of the more encouraging signs for 2026.
FRAGILE CONFIDENCE
That said, confidence remains fragile. Economic growth forecasts are underwhelming and there is little evidence that government policy is actively stimulating housing market momentum.
Another factor weighing on sentiment for families is the introduction of the additional council tax surcharge on properties valued at £2m and above – the so-called “mansion tax”.
In London, where £2m often buys a standard family home in a desirable area, rather than a luxury property, this surcharge can make finding the right home more difficult.
“Families moving up the ladder may now face higher purchasing costs.”
Families moving up the ladder may now face higher purchasing costs, adding a layer of complexity to an already competitive market and encouraging more cautious decision-making.
The result is a market where activity is returning, but cautiously.
Buyers are deliberate, price sensitivity remains high, and transactions take longer to progress.
This is not a market driven by urgency, but by considered necessity.”
