The housing market has entered 2026 with renewed momentum after a quieter end to last year. Buyer confidence has returned following the Autumn Budget, mortgage rates have stabilised at their lowest level in almost three years, and demand has rebounded strongly. However, buyers now have more choice than at any point in the past eight years, making pricing strategy crucial for sellers.

Key market highlights

UK house prices have risen by 1.2% over the past year.
Buyer confidence has recovered following late-2025 uncertainty, with demand broadly in line with levels seen in early 2024.
Average mortgage rates are at their lowest point since 2022, supporting the desire to move.
House price changes across UK cities range from falls of 2.6% to growth of 5.5%.
Increased housing supply is giving buyers more choice and putting greater emphasis on realistic pricing for sellers.

Average UK house prices

As of December 2025, the average UK house price stands at £269,800, reflecting annual growth of 1.2%, or around £3,190 over the year.

Flats and maisonettes have continued to soften, with average values down by approximately £2,810, representing a decline of 1.4%. Terraced houses have risen by around £3,910, an increase of 1.7%, while semi-detached homes have seen stronger growth of 2.2%, equivalent to about £6,080. Detached houses have increased in value by roughly £5,330, or 1.2% over the year.

Buyer demand rebounds to 2024 levels

The market has seen a strong seasonal uplift in buyer interest in January following the quieter end to 2025. Many buyers delayed decisions late last year amid Budget uncertainty, but confidence has now returned.

Buyer demand at the start of 2026 closely mirrors that of early 2024, although it remains 9% lower than the unusually busy start to last year, when many buyers rushed to complete purchases ahead of stamp duty changes.

As buyer activity has picked up, so too has seller confidence. One of the biggest differences compared with January last year is the amount of choice available. The total number of homes for sale is 6% higher than a year ago, with the average estate agent now marketing 34 properties, the highest level seen in eight years. This gives buyers more options and increases competition between sellers.

While the number of newly listed homes and sales agreed has risen in recent weeks, both remain below the peaks seen at the start of 2025.

House prices rose by 1.2% over 2025

Over the course of 2025, the average UK house price increased by 1.2%, rising by around £3,200 to reach £269,800. This represents a slowdown compared with the 1.9% growth recorded in 2024.

A clear north–south divide continues to shape price movements. The Northwest recorded average house price growth of 3.5% over 2025, while prices across Scotland rose by 2.9%. Northern Ireland saw the strongest growth, with prices increasing by 7.6%, albeit from a lower starting point.

In contrast, London recorded a decline of 0.7% over the year, driven by affordability pressures, higher stamp duty costs and a significant increase in the number of homes for sale. The Southeast and Southwest also saw small price falls of around 0.1%.

Local affordability drives city-level price changes

Housing market conditions remain highly localised, with price trends varying significantly between towns and cities.

Burnley recorded the strongest price growth in 2025, with average values rising by 5.5%, more than four times the national average. Other Northwest locations such as Rochdale, Blackburn, Liverpool and Wigan also recorded growth of over 4%. These areas all have average house prices below the Northwest regional average of £205,400, making them attractive to buyers seeking value.

Improved mortgage affordability and more flexible lending criteria have boosted demand in these areas, while the number of homes for sale in the Northwest is 7% lower than a year ago, limiting supply and supporting prices.

Across much of the UK outside Southeast England, lower prices, better affordability and stable stock levels have resulted in modest but consistent price growth.

Price growth weakest across southeastern England

House price inflation remains weakest in southern England, where higher house prices increase the cost of buying through both mortgage payments and stamp duty.

Buyers also have significantly more choice. London currently has 14% more homes for sale than a year ago, with stock levels around 3% to 4% higher than in other southern regions. This abundance of supply has reinforced a buyers’ market.

While demand remains present, buyers in the South are highly price sensitive. Many sellers are sitting on substantial equity gains from previous years and need to align expectations with what today’s buyers can realistically afford.

Mortgage affordability continues to improve

The past two years have seen a strong recovery in housing activity following the sharp rise in mortgage rates earlier in the decade. Around 1.2 million sales were completed last year, the highest level since the pandemic.

Mortgage rates have now stabilised, and competition between lenders remains strong. The average rate for new mortgages fell to around 4% in December, the lowest level since September 2022.

In addition, many households can now borrow up to 20% more than they could a year ago on the same income and mortgage rate. This has supported increased activity and price growth in areas where affordability allows. Understanding borrowing capacity remains a key step for anyone planning a move.

What’s next for the UK housing market?

The increase in homes for sale is drawing more buyers back into the market, underlining the strong desire to move home. However, local conditions matter more than ever, and sellers need to price competitively to attract serious interest.

Current trends are expected to continue through the early months of 2026, with healthy demand for homes that are realistically priced and offer good value. Buyers benefit from increased choice, while sellers who adapt to local market conditions are best placed to secure a sale.