The UK housing market has started 2026 with renewed energy. Improving mortgage affordability, stabilising interest rates and growing confidence among buyers and sellers are helping to rebuild momentum after a quieter end to last year.

While activity levels are rising, house price growth remains steady rather than rapid. This balance between stronger transaction levels and modest price inflation is creating a healthier and more sustainable market environment.

At Seths, we are seeing these trends reflected locally across Leicester, where buyer demand is strengthening but pricing discipline remains essential.

House Prices Remain Stable with Modest Growth

The average UK house price now stands at approximately £269,900, representing annual growth of around 1.3%. This is slightly lower than the 1.8% growth recorded a year ago, highlighting that although activity has improved, price inflation remains controlled.

Growth continues to vary by property type. Flats and maisonettes have seen small annual declines, while terraced homes are up around 1.9%. Semi-detached homes have performed more strongly with annual growth of approximately 2.7%, and detached homes have increased by around 1.6%.

Across Great Britain, the North West is one of the strongest performers with annual growth of around 3.3%, followed by Scotland at 2.8% and the North East at 2.5%.

By contrast, London remains subdued, with average prices marginally lower than a year ago.

For sellers, this means pricing must reflect local market realities rather than national headlines.

Stronger Sales Activity Supporting the Market

The start of 2026 has seen a noticeable rebound in agreed sales. Improved mortgage affordability has brought many buyers back into the market, particularly first-time buyers.

Although agreed sales remain slightly below the exceptionally strong levels seen at the start of 2025, transaction volumes are currently among the strongest February levels recorded in the past decade.

However, it is important to note that overall buyer numbers are slightly lower than this time last year. This means buyers in the market tend to be more serious and financially prepared, making quality enquiries more important than sheer volume.

For sellers, this reinforces the need to attract committed buyers through realistic pricing and strong presentation.

Increased Seller Confidence and Rising Stock Levels

One of the most notable trends in early 2026 is the increase in new listings. Seller confidence has improved, leading to a surge in homes coming onto the market.

There are already around 6% more homes for sale compared to a year ago, and this number is expected to rise further as we move into spring.

More choice is positive for buyers, but higher stock levels also limit how quickly prices can rise. In markets with increased supply, sellers must remain competitive to secure offers.

In Leicester, we are seeing healthy levels of stock, giving buyers greater selection while still maintaining steady demand.

Mortgage Rates Below 4% Strengthen Affordability

Perhaps the biggest driver of renewed momentum is the mortgage market.

Average mortgage rates for new loans have fallen to their lowest level in four years. Both two-year and five-year fixed rates are now below 4% for the first time since 2022.

This reduction has significantly improved affordability and confidence. While further Base Rate reductions are possible this year, mortgage professionals suggest that rates may not fall dramatically from current levels.

For buyers, this means current conditions represent some of the most favourable borrowing terms seen in recent years.

Buying Is Now Cheaper Than Renting for Many

A particularly significant development over the past year is the shift in affordability comparisons between buying and renting.

Due to lower mortgage “stress test” rates used by lenders, approximately 40% of homes currently on the market are now cheaper to buy with a mortgage than to rent locally. This is a substantial increase compared to last year, when only around 25% of homes met this threshold.

In regions such as the North East and Scotland, more than half of homes are now cheaper to buy than rent. While this dynamic is less pronounced in London and parts of the Midlands due to higher property prices, it is still encouraging many tenants to explore home ownership.

For first-time buyers in Leicester, this shift presents a real opportunity.

What This Means for Sellers in 2026

The current market environment is healthier and more stable than it has been in recent years. Transaction levels are improving, mortgage rates are supportive and buyer confidence is gradually rebuilding.

However, price growth remains modest. Sellers who price competitively from the outset are far more likely to secure interest quickly and maintain momentum within a chain.

In markets with rising stock levels, overpricing can quickly result in reduced visibility and longer time on the market.

What’s Next for the Housing Market in 2026?

We expect steady but modest price growth throughout the remainder of 2026. Improved affordability will continue to support transaction volumes, while regional differences will remain significant.

For buyers and sellers alike, local market insight is more important than ever. National averages rarely reflect what is happening at postcode level.

At Seths, our team closely monitors activity across Leicester to provide accurate valuations, strategic pricing advice and guidance tailored to your specific property.

If you are thinking about buying or selling in 2026, now is a good time to review your options.

📞 Call Seths today on 0116 266 9977 or start with a FREE online property valuation to understand your home’s current market position.

Click HERE for your FREE property valuation.

With improved mortgage conditions and steady demand, 2026 is shaping up to be a year of stability and opportunity.