The housing market has had a steadier ride this year, as a slow but consistent reduction in interest rates by the Bank of England has made mortgage borrowing more attractive, and rising wages have improved affordability.
Buyers and sellers were on tenterhooks ahead of the budget, with fresh housing and tax policies from chancellor Rachel Reeves having the potential to rock the boat.
But with few nasty surprises in terms of housing policy from Reeves, and an interest rate cut voted through in the Bank of England’s December rate-setting meeting, heading into 2026 many are taking a positive stance on price growth.
“The headline is that home movers will be entering 2026 looking at cheaper average mortgage rates than they were at the beginning of 2025, helping affordability,” said Matt Smith, Rightmove’s mortgage expert.
“Those who are seeing slightly lower house prices in their area compared to last year and may have also had an end-of-year pay rise, will see their affordability improved further.”
House prices are tipped to rise 2%-3% in 2026 as the UK’s market shifts from subdued to steady, and normality resumes for the first time since the pre-COVID era, according to estate agent Jackson-Stops.
Interest rate cuts combined with post-autumn budget relief is likely to give many sellers and buyers the confidence to move forward with their plans, the company added.
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“While much of the industry was uneasy about the kite-flying in the run-up to the budget, the final outcome was better than initially feared. This has created the conditions for an unexpected ‘Reeves rebound’, giving buyers the reassurance they needed to proceed with their plans and move forward,” said Nick Leeming, chairman of Jackson-Stops.
Housing platform Rightmove also predicted that the 2026 market will be more like the first half of this year, which painted an encouraging picture. In the second half, confidence was affected by budget speculation.
Buyer affordability is set to improve, and the good choice of homes for sale continues to run at a decade-high level, the platform said.
Rightmove predicts stronger housing market activity, leading to modest upwards price pressure, and causing the average price of property coming to the market for sale to rise by 2% in 2026.
Hamptons’ estimates track both Jackson-Stops’ and Rightmove’s. “Against this backdrop, price growth will be modest but positive. Based on the ONS House Price Index, we forecast a 2.5% rise across Great Britain in Q4 2026, with the Midlands and North leading the charge thanks to stronger affordability,” the company said.
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This buoyancy is expected to start earlier than 2026. Rightmove said it expects a bigger-than-usual Boxing Day bounce on its platform, as many would-be buyers who paused their plans due to budget uncertainty join the traditional start of the busy home-moving season.
Rightmove’s survey of over 10,000 potential movers revealed that nearly 20% were waiting for the outcome of the budget to resume their plans.
This large percentage underlines the impact of the budget hiatus, and it’s likely that many of this group will be re-engaged by the number of new listings that are being held back ready for launch on or soon after Boxing Day.
There are already some very early signs of a post-budget market rebound in some segments and sectors of the market, though the usual festive slowdown has delayed a more widespread bounce-back.
In London, the number of new sellers coming to market at the top end, which was hardest hit by budget speculation, was up by 24% in the week after the budget compared with the week before, as some who were waiting for financial clarity acted.
Labour’s proposed mansion tax, due to be introduced from 2028, appears less impactful than initially suggested, said Jackson-Stops. The annual levy is set at £2,500 for homes valued above £2m and £7,500 for properties exceeding £5m.
The estate agency expects this to have little effect on buyer appetite at this level of the market, though there are concerns around how properties will be valued in practice and how the valuation process will be administered.
“We believe the upper end of the market will stabilise in 2026 and have noticed a resurgence in both client focus and enquiries over the last four weeks,” added Charlie Warner, a partner at buying agency Heaton & Partners.
As for potential property hot spots outside London, Hamptons predicts a “power shift” in the property market.
“Since prices bottomed out in 2010, London has been the star performer. But next year could mark a turning point: the East Midlands is forecast to overtake London in cumulative growth, with the North West and West Midlands following by 2027,” the company said.
Norwich has also been singled out as an up and coming market.
“While some parts of North Norfolk with a higher concentration of second homes have seen a more measured market this year, this reflects a positive shift in buyer dynamics rather than a lack of demand,” said David Lambert, director of Jackson-Stops Norfolk offices in Burnham Market and Norwich.
“Compared with the height of the pandemic, when second-home purchases dominated many coastal markets, there is now a far greater emphasis on permanent moves. More buyers are choosing Norfolk as a long-term place to live, which is helping to create a more balanced and sustainable market.”
Looking into the future, the regional mismatch will continue, Hamiltons predicts.
By 2028, Britain’s average price will have risen 84% since 2010, reaching £289,500, the company said. The East Midlands will lead with 94%, followed by the West Midlands (90%) and North West (88%). London will slip to fourth place – and remain the only region where prices sit below their 2022 peak.
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