As we look ahead to 2026, the housing market is showing signs of renewed confidence. After a year shaped by economic adjustment, shifting mortgage rates and the impact of the Autumn Budget, we expect the market to stabilise and deliver steady, modest growth.

At Seths, our view is that 2026 will be a year of balance. Buyers are returning, affordability is gradually improving and sellers who price realistically will be well placed to secure a move.

Key Outlook for 2026

We expect new seller asking prices across the UK to rise by around 2% by the end of 2026. Growth will not be uniform across the country. More affordable markets, particularly in Scotland, Wales and northern England, are likely to outperform, while London and parts of the South may see slower price movement.

First-time buyers are likely to benefit most from 2026 conditions. With improving affordability, lower mortgage rates compared to recent years and a wider choice of properties, the environment is more favourable than it has been for some time.

However, changes announced in the Autumn Budget, including the introduction of a new annual charge on homes valued above £2 million from 2028, may slow activity at the very top end of the market.

What Will Happen to House Prices in 2026?

Our forecast suggests that national asking prices will increase by approximately 2% during 2026. This reflects a market that is recovering steadily rather than accelerating rapidly.

After the quieter end to 2025, many buyers who delayed decisions due to Budget uncertainty are now returning with renewed confidence. At the same time, sellers remain realistic about pricing, which is helping to maintain transaction levels.

Importantly, price growth is expected to remain below wage growth and inflation, meaning homes will gradually become more affordable in real terms.

Buyer Affordability Is Improving

One of the strongest themes for 2026 is improving affordability. Mortgage lenders have gradually loosened lending criteria in recent months, allowing many buyers to borrow more responsibly. Combined with stable or falling mortgage rates and rising wages, this is increasing spending power.

While this improved borrowing capacity may support modest price growth, we do not anticipate a return to the rapid increases seen during previous market booms. Instead, the market appears to be moving towards sustainable, manageable growth.

The Impact of the Autumn Budget

In the lead-up to the Autumn Budget, uncertainty caused many potential movers to pause their plans. We saw this locally across Leicester and the East Midlands, with some buyers waiting for clarity before committing.

With that uncertainty now removed, we expect those delayed decisions to translate into activity in early 2026. The market typically sees renewed energy from January onwards and this year could see a stronger-than-usual start as postponed plans are revived.

How the Economy Could Influence the Market

Interest rates will remain a key factor throughout 2026. The Bank of England Base Rate now sits at 3.75% and market expectations suggest that further cuts may be possible during the year. If this happens, mortgage rates are likely to edge down gradually, further supporting buyer confidence.

Inflation is also stabilising. This reduces pressure on household finances and helps create a more predictable environment for buyers and sellers. With property price growth expected to remain below inflation, affordability should continue to improve.

Wage growth is also forecast to outpace property price growth, which is particularly encouraging for first-time buyers trying to build deposits and meet affordability criteria.

Regional Variations in 2026

The UK property market is highly regional, and 2026 will be no different.

Scotland, Wales and northern England are forecast to see stronger growth due to better affordability and balanced supply and demand.

London and parts of southern England are likely to experience slower growth. Higher property values, greater stamp duty costs and the longer-term impact of the upcoming charge on properties above £2 million may dampen activity at the top end.

Here in the East Midlands, including Leicester, we expect steady and sustainable growth. Our region continues to offer relative affordability compared to the South, while benefiting from strong transport links and local demand.

First-Time Buyers in 2026

First-time buyers could find 2026 more favourable than the past few years.

There is currently a wider choice of properties available, giving buyers stronger negotiating power. Mortgage rates are lower than they were in 2023 and 2024, and changes to lending criteria mean some buyers can borrow more than before.

That said, challenges remain. Deposit requirements are still significant and many buyers may rely on family support. Mortgage rates, although improved, remain higher than they were at the start of the 2020s.

Overall, we expect first-time buyers to continue playing a major role in driving market activity.

Who May Face More Challenges?

The most challenging conditions are likely to be felt at the very top of the market.

From April 2028, homes valued at £2 million or more will be subject to a new annual charge. Properties above £2 million will incur an annual £2,500 charge, rising to £7,500 for homes valued at £5 million or more.

Although this affects a very small percentage of UK homes, it is heavily concentrated in London and parts of the South. As a result, we may see some cautious pricing and slower activity in this segment during 2026 as buyers and sellers adjust expectations.

What About Mortgage Rates?

Mortgage rates have stabilised significantly compared to the volatility of recent years. The average rate for new lending has fallen closer to 4%, which is considerably more competitive than the peaks seen following the 2022 mini-Budget.

Financial markets currently expect at least one further rate cut during 2026, although this will depend on inflation and wider economic performance. Two-year fixed products may see more movement than five-year deals, but rate direction can change quickly based on economic data.

Anyone considering a move should seek independent mortgage advice to understand what is possible based on their personal circumstances.

Planning Your Move in 2026

At Seths, we believe 2026 could be a positive year for many buyers and sellers, particularly in well-priced, mid-market properties.

For sellers, realistic pricing will be critical. With more choice available to buyers, properties that are priced competitively from the outset are far more likely to secure strong interest and avoid reductions later.

For buyers, improved affordability and steady mortgage rates create a window of opportunity, especially in areas like Leicester and the East Midlands where values remain competitive.

If you are thinking of buying or selling in 2026, our team at Seths is here to guide you through the process with clear, local expertise and practical advice.

📞 Speak to our team today on 0116 266 9977.
📍 Or visit your local Seths branch for tailored guidance on your next move.

2026 is shaping up to be a year of steady progress rather than dramatic change and with the right strategy, it could be the right time to make your move.