Average UK house prices rose modestly in February, with annual growth ticking higher despite weak demand and falling values in London.
The latest figures from the Office for National Statistics show the average UK property price reached £268,000 in February 2026, up 1.2% year-on-year and £3,000 higher than the same period last year.
On a monthly basis, prices increased by 0.1%, pointing to a broadly flat market.
Growth was uneven across the UK. England saw prices rise by just 0.8% to £290,000, while Wales and Scotland recorded stronger increases of 2.5% and 2.3% respectively. Northern Ireland continued to outperform, with prices up 7.5% in the year to Q4 2025.
SUBDUED TRANSACTIONS
At a regional level, Yorkshire and the Humber led England with annual growth of 3.9%, while London remained the weakest performer, with prices falling by 3.3% over the year.
Data from HM Revenue & Customs shows there were 102,000 residential transactions in February on a seasonally adjusted basis, down 5.6% compared with a year earlier, although activity picked up month-on-month.
Meanwhile, mortgage approvals rose slightly to 62,000 in January, according to the Bank of England, but remain below the recent six-month average.
WEAKENING DEMAND
Survey evidence also points to weakening demand, with the Royal Institution of Chartered Surveyors reporting a dip in buyer enquiries amid concerns over the interest rate outlook.
The ONS said the latest estimates remain provisional and could be subject to revision, particularly for new-build properties where pricing data is more volatile.
Recent methodological changes, including improvements to how property data is linked and modelled, are expected to reduce the scale of future revisions and improve accuracy.
The data suggests a market still struggling for momentum, with modest price growth masking significant regional divergence and ongoing pressure on activity levels.
INDUSTRY REACTION
Nathan Emerson, CEO of Propertymark, says: “We sit in a phase where the forthcoming months are more difficult to foretell from an affordability viewpoint.
“With the wider picture regarding inflation being very complex to fully envisage, the Bank of England will likely choose to approach the situation with extreme caution, as they make their next base rate decision at the end of the month.
“Worst case scenario, some people may find additional pressures being placed on their household finances across the coming months from three distinct angles. Inflation may push up prices on key household purchases, such as the weekly shop.
“Base rates could also see increases, affecting those with tracker products, as well as those taking on new mortgage deals, and we could see potential fluctuation in energy prices as well.”
CHRONIC IMBALANCE
And he adds: “Rising rental prices continue to reflect the chronic imbalance between supply and demand in the private rented sector. Letting agents across the UK are consistently reporting high tenant demand alongside a shortage of available properties, which is inevitably placing upward pressure on rents.
“If rents are to stabilise, measures that support supply must be prioritised, including support for landlords and a regulatory environment that encourages long-term investment. Without this, affordability challenges for tenants will likely only intensify.”
HOLDING STEADY
Richard Donnell, Executive Director of Resarch at Zoopla, says: “The housing market is holding steady despite events in the Middle East – house price inflation is slower than earnings which is helping with affordability.
“Zoopla’s data shows buyers are back in the market after Easter and sales agreed are holding up as committed buyers press ahead.
“Lower mortgage rates will support activity in the coming months, which is good news for record numbers of sellers, but it is still very much a buyers market. This means sellers have to be realistic on price, which they are currently, explaining why prices are only rising at 1.2%.
“Rental inflation has slowed and this will be welcome news for renters. For landlords, rents rising at over 3% is positive but for some this may not be enough to offset the extra costs and regulation from the Renters Rights Act which starts from 1 May.
“Low investment in growing the stock of rented homes is supporting rents rising faster than house prices. Policies to grow the supply of rented homes are needed to moderate rental inflation and ease cost of living pressure on renters.”
MARKET FINDING BALANCE
Iain McKenzie, CEO of The Guild of Property Professionals, says: “Annual growth of 1.2%, with prices up just £3,000 over the past year, and a monthly increase of 0.1%, tells us that values are effectively steady and that the market is finding its balance.
“Given the backdrop, that resilience is notable. Inflation climbed to 3.3% in March and mortgage markets are adjusting to the prospect of rates staying higher for longer. Alongside ongoing geopolitical tensions feeding into energy costs, this is inevitably prompting a more cautious mindset among buyers.
“Caution is beginning to emerge, even though activity on the ground has, until recently, been holding up. In February, mortgage approvals picked up and transaction levels reached their highest point in almost a year, while sales agreed remained broadly stable, seeing only a marginal decrease. This suggests that committed buyers continue to progress.
“What is continuing to shape house price growth is supply. The number of homes on the market is at its highest level in over a decade, and that’s keeping a lid on house price inflation. Buyers have more choice and greater negotiating power, meaning sellers need to be realistic and price competitively.
“While there is underlying demand, aspects such as rising borrowing costs and economic uncertainty are likely to impact momentum for the time being. For sellers, strategy and pricing will be critical, while buyers who are in a position to proceed can still find good opportunities in a more balanced market.”
HAT-TRICK OF HEADWINDS
Tom Bill, head of UK residential research at Knight Frank, says: “As a result of the Middle East conflict, mortgage rates have climbed, sentiment has been dented and there is speculation about how the government will respond to the economic shock.
“This hat-trick of headwinds means house prices will come under pressure this year.
“The overall impact will depend on how long the conflict lasts and to what extent it escalates. Affordability remains the biggest drag on house prices, which is why London and south-east England lag the rest of the country.
“Although rental value growth has been declining, the Renters’ Rights Act could increase upwards pressure on rents as landlords mitigate higher risks around repossessing their property or guaranteeing rental income. Any further reduction in supply as landlords sell up could also increase the financial squeeze on tenants.”
EXPECTATIONS TEMPERED
Jason Tebb, President of OnTheMarket, says: “Property values continued their steady rise on an annual basis in February, with the average price £3,000 higher than a year ago.
“Increased confidence and activity resulted in a strong start to the year for the market as a result of post-Budget clarity, although price increases are being kept in check by increased stock, more choice and continued affordability concerns.
“The average UK house price conceals significant regional variations. Values in London continue to contract, by 3.3 per cent in the 12 months to February, due to increased supply and stretched affordability in the capital where property prices tend to be considerably higher than other parts of the country.
“These figures are a little dated and since then, the Iran war has had an impact on the market with some buyers adopting a more cautious ‘wait and see’ approach. Others are focused and keen to proceed.
“Higher mortgage rates have raised affordability concerns, although a number of lenders have trimmed their rates in recent days as Swap rates have settled. Inflation rising to 3.3 per cent in March, with the potential for more to come, has tempered market expectations of further base-rate reductions for a while at least.”
DEMAND HASN’T VANISHED
James Evans, CEO at Douglas & Gordon, says: “The latest ONS House Price Index data shows a small rise in values, which tallies with what we’ve been seeing across London.
“The market is broadly steady, with modest growth focused on pockets where supply is tight and correctly priced homes still attract competition.
Yet, with these figures reflecting house prices until February, they largely predate the escalation of the Middle East conflict and the recent changes in mortgage pricing.
“As such, this trend may prove harder to build on in the months ahead, particularly if higher borrowing costs persist.
“Even so, this uplift is a sign that demand hasn’t vanished. With hopes of relief via rate cuts or stamp duty changes fading, more movers are accepting that waiting for perfect conditions also means putting life on hold.
“For many, decisions are being driven by jobs and family needs, and buyers with competitive mortgage offers will be keen to proceed while those deals still work.
“The encouraging point is that this is starting to look like a market that rewards good preparation and sensible pricing. Even amid wider uncertainty, there are still buyers ready to act when the right home comes along.”
EDGING FORWARD
Damien Jefferies, Founder of Jefferies London, says: “The figures suggest that the UK property market is continuing to edge forward, albeit at a measured pace, with both monthly and annual growth remaining in positive territory.
“However, with inflation surprising on the upside again today, there is a growing risk that interest rates remain higher for longer and could even increase further.
“This is likely to dent confidence to an extent and keep the rate of house price appreciation tempered over the coming months.”
COLLAPSED SALES
Chris Hodgkinson, Managing Director of House Buyer Bureau, says: “For all of the talk that the property market is improving, we’re still seeing a growing number of sales collapse, and many sellers are simply giving up and withdrawing from the market altogether because they have become exhausted by the process and a lacklustre level of buyer activity.
“The reality is that selling a home remains a long, uncertain and often costly experience. Buyers are taking longer to commit, affordability remains stretched, and chains are still incredibly fragile.”
HOLDING FIRM
Verona Frankish, CEO of Yopa, says: “Whilst the rate of house price growth remains fairly modest, the fact that prices are still moving in the right direction demonstrates that the market continues to hold firm despite a tougher economic backdrop.
“Buyers have spent the last year adapting to a world of higher borrowing costs and greater uncertainty and, as a result, we’re now seeing a far more stable and sustainable market emerge, built on realism rather than rapid price inflation.”
AFFORDABILITY PRESSURE
Marc von Grundherr, Director of Benham and Reeves, says: “The latest figures show that the UK housing market remains remarkably resilient, with prices holding firm despite renewed pressure on mortgage affordability and wider economic uncertainty.
“London continues to lag the rest of the UK, with values down 3.3% year-on-year, but the capital remains a market of huge value and importance as a destination of choice for both domestic and international homebuyers.”
HIGH SUPPLY, GROWING DEMAND
Jeremy Leaf, north London estate agent and a former RICS Residential Chairman, says: “Though offering the most comprehensive house-price snapshot, as including approximately 40% of cash as well as mortgaged transactions, these figures are a little dated.
“The broadly-unchanged picture tells a story of still-high supply and growing demand in the period leading up to the start of the Middle East war, supported by mortgage offers arranged a few months earlier and better-than-expected employment figures.
“However, the switch from want-to-move to need-to-move coincided with upward pressure on interest rates and inflation so looking forward, prices are likely to continue to stay in check and even soften a little but no significant change is expected for now.
“Rents are still rising but not as quickly as previously, partly due to worries about inflation having an impact on affordability.
“However, rents may have dropped further if they weren’t supported by a shortage of stock, exacerbated by landlords leaving the sector ahead of the introduction of the new Renters’ Rights Act at the beginning of May.”
STABILISING VALUES
Nick Leeming, Chairman of Jackson-Stops, says: “The latest data suggests a steady market, with values stabilising and modest annual growth being recorded.
“Transaction activity continues, but conditions are more constrained than in previous periods. Buyer demand is present, although increasingly contingent on pricing and financing, with affordability remaining a key consideration in determining the pace of sales.
“Performance continues to vary across regions, with markets characterised by stronger demand and constrained supply proving more resilient, while others are experiencing longer timeframes to agree sales and greater price sensitivity.
“Looking ahead, the near-term outlook will be influenced by the direction of mortgage rates and wider financing conditions. Recent adjustments in mortgage pricing, alongside ongoing uncertainty around the policy outlook from the Bank of England, are likely to weigh on momentum, even where underlying demand remains intact.
“At the same time, heightened geopolitical uncertainty is making the outlook more difficult to predict over the coming months. However, the market has so far shown continued resilience, with activity continuing even as borrowing costs have edged higher in recent weeks.
VIEWING NUMBERS SOFTENING
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, says: “The property market continues to demonstrate resilience despite a backdrop of global uncertainty.
“The Middle East conflict has contributed to increased caution across financial markets. Higher mortgage rates have naturally become a talking point among applicants.
“We are seeing a slight softening in viewing numbers as some buyers pause to assess the situation; however, the underlying market remains robust.
“Serious buyers are still very much active, with second viewings continuing and sales being agreed at levels typical for this time of year. While there is greater awareness of cost, for the right property, committed buyers are continuing to move forward with confidence.”
DUAL MARKET
Barret Kupelian, Chief Economist at PwC UK, says: “The housing market is no longer moving as one country, but as two. The data shows the UK housing market is still living with a pronounced North-South divide.
“London and the South East remain under pressure, with London house prices down 3.4% year-on-year, while the North continues to move ahead, though at little more than the pace of consumer price inflation.
“The question now is not whether the market softens, but by how much. The Autumn Budget uncertainty of last year may be behind us, but events in the Middle East have replaced it with a fresh fog: uncertainty over interest rates, volatility in swap markets pushing up mortgage pricing, and the risk of higher than initially anticipated inflation for longer. Add in the introduction of the Renters’ Rights Bill, and a cooler housing market would be a natural consequence.
“In short, the housing market is in a cautious phase. Once the fog begins to lift on rates, inflation and regulation, activity should start to recover.”
CONCERNING SITUATION
Stacy Eden, Partner and National Head of Real Estate at tax and consulting firm RSM UK, says: “With UK economic growth expected to be under 1% for 2026, and slowing wage growth being eaten away by inflation, it is unsurprising that buyer demand is waning, and concerns over the interest rate outlook are rising.
“Mortgage approvals for house purchases are also below average, according to the Bank of England.
“Following inflation figures of 3.3% and expected rises in the future driven by the conflict in the Middle East, the concern is house prices will continue to edge downwards during 2026.
“The situation in London is particularly concerning. With a monthly fall of 1.9% and an annual fall of 3.3%, London is most impacted by the high levels of Stamp Duty Land Tax (SDLT) and static real wages due to its higher house prices.
“London is also a more international market compared to other UK regions, and therefore more sensitive to challenges damaging international investment such as high levels of taxation, high regulation, and UK economic volatility. The mansion tax on properties worth over £2m also disproportionally affects London.
“London also experienced the lowest rental growth to March 2026 at 1.7% compared to a UK average of 3.6%.”
