UK house prices are expected to record modest growth in 2026, supported by improving affordability and easing borrowing conditions. Nationwide forecasts price growth of between 2% and 4%, with rival lender Halifax projecting a slightly lower range. Both point to stronger incomes and lower mortgage rates helping to underpin buyer demand despite ongoing economic pressures.
- Halifax expects price growth of between 1% and 3% over the same period
- Affordability is improving as wage growth continues to outpace house price growth
- Modestly lower interest rates are expected to support housing market activity
- Recent Budget changes to property taxes are not expected to have a significant short-term impact on the housing market
- Higher taxes on rental income may limit new buy-to-let supply and maintain upward pressure on rents
Original article source: Sharecast
Forecasts pointing to modest house price growth in 2026 underline a market that is regaining balance rather than chasing momentum. After several years of sharp rate rises and constrained affordability, the picture is now more measured, with fundamentals beginning to realign.
Income growth continuing to outpace house prices matters. It restores a degree of confidence for buyers who have been sidelined, particularly first-time purchasers and equity-rich movers weighing up their next step. Lower mortgage rates have already started to filter through, and even incremental reductions can materially improve monthly affordability at today’s price levels.
For London and the South East, this type of steady growth is arguably healthier than a rapid rebound. It supports values without overstretching affordability and reinforces the city’s appeal as a long-term store of value, especially for overseas buyers looking beyond short-term volatility. Stability tends to attract capital quietly rather than speculatively.
The tax backdrop is also more nuanced than headlines suggest. While higher taxes on rental income may temper buy-to-let expansion, the delayed and limited scope of council tax changes reduces the risk of sudden market disruption. A constrained pipeline of new rental supply, combined with consistent tenant demand, is likely to keep rental values under upward pressure, reinforcing the income case for well-positioned assets.
