The UK housing market is ending 2025 on a more stable footing, with momentum expected to carry into the new year. Following the Autumn Budget and the usual seasonal slowdown, buyers are beginning to return and early 2026 is forecast to see a stronger-than-usual start. While the desire to move home remains high, affordability constraints are continuing to limit how far house prices can rise.

A strong year for home moves

The clearest sign of market health is the number of people successfully moving home and on that measure, 2025 has been the strongest year since 2022. Around 1.2 million homes were sold over the year, representing a 9% increase on 2024 and bringing transactions back in line with the long-term 10-year average.

Rising household incomes, alongside a period of relative stability in mortgage rates, have helped restore confidence. Estate agents also recorded the highest number of homes for sale in 7 years, with many sellers also acting as buyers. This churn has played a key role in supporting sales volumes.

The total value of homes sold in 2025 reached approximately £367 billion, the highest figure since 2022. Looking ahead, sales are expected to dip slightly to around 1.18 million transactions in 2026, reflecting the impact of late-2025 caution rather than a weakening underlying market.

House prices continue to rise, but at a slower pace

Despite the increase in sales activity, house price growth has cooled. As of November 2025, the average UK house price stands at around £270,300. This represents an annual increase of just over £3,050, equivalent to growth of around 1.1%.

Flats and maisonettes have seen modest annual price falls of just under £2,000, while houses have continued to record small gains. Terraced homes are up by close to £4,000 over the year, semi-detached homes by around £5,400 and detached homes by roughly £5,500.

This subdued level of price growth is well below the long-term average of close to 4% and reflects the ongoing adjustment to higher borrowing costs and increased buying expenses following the end of stamp duty reliefs earlier in the year.

Budget uncertainty slowed activity towards the end of 2025

The final months of 2025 saw a sharper slowdown in activity than is typical for the time of year. Speculation ahead of the Autumn Budget led many buyers to pause, resulting in buyer demand running around 12% lower than a year earlier. New sales agreed also fell, down by approximately 9% over the same period.

However, this late slowdown will not materially affect 2025 transaction totals. On average, it takes around 5 months for a sale agreed to complete, meaning the recent dip in agreed sales will only show up in completed transaction figures during the first few months of 2026. This timing explains why sales volumes are expected to ease slightly next year, rather than fall sharply.

First-time buyers remain the engine of the market

First-time buyers have been the standout driver of activity in 2025. They accounted for nearly 2 in every 5 home purchases, giving them the largest share of the market. Existing homeowners buying with a mortgage made up roughly 1 in 3 sales, while cash buyers represented just over 1 in 5. Landlords using a mortgage accounted for around 7% of sales.

Improved access to mortgages since the spring has significantly boosted affordability for first-time buyers, with their numbers running about 20% higher than in 2024. Their share of total sales is now above the average seen between 2000 and 2024, and they are expected to remain the largest buyer group again in 2026.

That said, affordability and buying costs continue to cap what first-time buyers can pay, particularly in higher-priced regions.

A widening north–south divide

The divergence between regional markets has become more pronounced. Across much of southern England, average house prices have edged down slightly, with falls of up to 0.6% in some areas. High house prices and stamp duty costs remain a drag on affordability, limiting price growth.

In contrast, lower-priced regions continue to perform more strongly. House prices in the North West are rising by close to 3%, while northern England, Scotland and Wales are seeing growth of between 2% and 3%. Better affordability in these markets is supporting both demand and price growth.

This trend is also reflected in first-time buyer behaviour. Despite improved mortgage affordability, buyers in London and the South are generally looking at cheaper properties than a year ago due to higher stamp duty costs. In regional markets, first-time buyers are paying more than last year, helping to underpin stronger local price inflation.

Local markets tell very different stories

At a local level, price movements vary widely. Northern Ireland is seeing the fastest overall growth, with prices up by around 6.7%, supported by a low starting base and a more settled economic backdrop.

Meanwhile, parts of southern England are experiencing modest declines. Prices are down by around 2.4% in Truro, just under 2% in Torquay and Bournemouth, and by similar amounts in parts of inner London. Factors such as higher council tax on second homes, changing working patterns and stretched affordability are weighing on demand in these areas. Suburban London markets, however, continue to record small annual gains of up to 1%.

What to expect in 2026

Looking ahead, the early months of 2026 are expected to see a release of pent-up demand, as buyers who delayed decisions ahead of the Budget return to the market. This should support a stronger-than-usual start to the year.

Housing sales are forecast to total around 1.18 million in 2026, remaining close to the long-run average. There will continue to be plenty of choice for buyers, which should help keep price growth modest.

Average UK house prices are expected to rise by around 1.5% over 2026. Beyond that, annual price growth is forecast to average just over 2% between 2027 and 2029, as affordability gradually improves and the market continues to reset.

While the appetite to move home remains strong, realistic pricing will be essential for sellers, particularly in southern England, as affordability continues to be the key constraint shaping the market.