UK house prices are expected to rise modestly in 2026, according to Halifax, as easing mortgage rates begin to offset slower wage growth and softer employment conditions. The lender’s latest figures show prices dipped at the end of 2025, but overall market activity remained resilient and broadly in line with pre-pandemic levels. Improved affordability metrics and greater choice in higher loan-to-value mortgages are supporting buyer confidence as the year begins.
- Halifax forecasts UK house price growth of between 1% and 3% in 2026
- The Bank of England Base Rate was cut from 4% to 3.75% in December, contributing to lower mortgage rates
- The house price-to-income ratio fell to its lowest level in a decade in December
- Industry bodies continue to highlight affordability pressures and the ongoing undersupply of homes
Original article source: Forbes Advisor UK
While the headline numbers lead to a cooling market, the detail underneath suggests something more constructive. A modest pace of price growth, combined with improving mortgage availability, signals a market that is recalibrating rather than retreating.
December’s price dip appears closely tied to late-year uncertainty rather than any structural weakness. Activity levels remained resilient through 2025, and with interest rates now edging lower, borrowing conditions are already starting to look more supportive as 2026 unfolds. For many buyers, particularly those reliant on higher loan-to-value products, the expanding range of mortgage options is a meaningful shift.
Affordability is also moving in a healthier direction. A house price-to-income ratio at its lowest level in a decade marks a clear contrast to the pressures seen during the post-pandemic surge. While wage growth has slowed, this easing of price strain helps rebalance the market and creates a more stable entry point for both first-time buyers and long-term investors.
From an investor perspective, forecasts of 1-3% growth reflect a market prioritising sustainability over short-term momentum. This kind of environment often favours disciplined, longer-term strategies rather than speculative activity. Price stability, paired with easing finance costs, tends to support rental demand and reduce volatility across established locations, particularly in London and other supply-constrained markets.
Concerns around employment trends and consumer caution remain valid, but they also underline why expectations have been reset. In many respects, this moderation strengthens the market’s foundations. With rate stability improving and chronic undersupply still unresolved, gradual growth looks both realistic and resilient as the year progresses.
