UK Property Market 2026: Q1 Insights and Forecast

The UK property market has entered 2026 on steadier ground than many predicted. After a year of resilience in 2025, the first quarter is shaping up to be more active than expected. For estate agents across England and Wales, understanding where the market stands – and where it is headed – matters more than ever.

This is your independent market review for Q1 2026.

2025 in Review: A Year of Resilience

The UK housing market proved remarkably resilient throughout 2025. Despite economic headwinds and significant policy changes, house prices held their ground.

Price Growth Across the Indices

The average house price growth across major indices came in at 1.1% for 2025. This modest figure masks a market that adapted quickly to changing conditions.

Key data points from the end of 2025 tell the story:

Land Registry (November 2025): Average UK house price of £271,188, up 2.5% annually
Halifax (December 2025): Average price of £297,755, up 0.3% annually
Nationwide (December 2025): Average price of £271,068, up 0.6% annually
Rightmove (January 2026): Average asking price of £368,031

These figures show a market that avoided the significant corrections some analysts had feared. The gap between asking prices and sold prices remained consistent, indicating realistic seller expectations.

The Stamp Duty Effect

April 2025 brought significant stamp duty changes that reshaped transaction patterns throughout the year.

The nil-rate threshold dropped from £250,000 to £125,000. For first-time buyers, the threshold fell from £425,000 to £300,000.

This created a predictable surge in Q1 2025 as buyers rushed to complete before the deadline. Q2 subsequently saw softer activity as the market absorbed the changes. By the second half of the year, transaction volumes had normalised.

Transaction volumes for April to December 2025 reached 872,620 on a seasonally adjusted basis. This represents a healthy level of activity considering the tax changes and broader economic context.

Property Type Performance

Not all property types performed equally in 2025.

Semi-detached homes led the way with 2.4% price growth. These properties appeal to families seeking more space without the premium of detached homes. They also attract first-time buyers looking for long-term homes rather than starter flats.

Flats performed worst, with prices falling 1% on average. This continues a trend seen in recent years, where the pandemic-induced desire for space persists. Flats in city centres, particularly those without outdoor space, faced the greatest challenges.

Regional Analysis: The North-South Divide Widens

2025 reinforced a familiar pattern. The North-South divide in property performance grew more pronounced.

Regional Performance Table

Region	Annual Change	Average Price
Northern Ireland	+7.9%	£217,082
North East England	+5.0%	£163,000
Scotland	+3.9% to +4.9%	£215,594
North West	+3.1% to +3.5%	£214,000–£245,000
Wales	+1.6% to +2.7%	£209,000–£230,000
South East	+0.7%	£384,000
South West	-0.8%	£301,000
London	-2.4% to -1.3%	£539,000–£547,000

The gap between the strongest and weakest performing regions reached 10.3 percentage points. Northern Ireland led with 7.9% growth, while London prices fell by up to 2.4%.

Northern Strength

Northern Ireland’s exceptional performance reflects several factors. The region started from a lower base, making homes more affordable relative to incomes. Economic confidence improved, and demand outpaced supply.

The North East of England saw 5.0% growth with an average price of just £163,000. This affordability attracted buyers priced out of southern markets. The region also benefited from investment in infrastructure and employment.

Scotland performed strongly with growth between 3.9% and 4.9%. The average price of £215,594 remains accessible compared to England’s southern regions.

Southern Struggles

London’s decline of 1.3% to 2.4% reflects ongoing affordability challenges. With average prices between £539,000 and £547,000, even high-earning professionals struggle to buy. The capital also saw an exodus of buyers seeking better value elsewhere.

The South West fell by 0.8%, with an average price of £301,000. This region had seen significant growth during the pandemic as buyers sought rural and coastal properties. The correction in 2025 brought prices closer to sustainable levels.

The South East managed modest growth of 0.7%, but with an average price of £384,000, affordability remains stretched.

What This Means for Agents

The regional divide requires different strategies. Agents in northern regions can price more optimistically, while those in London and the South West need to manage seller expectations carefully.

Current Market Position: Q1 2026

January 2026 started with unexpected strength. Several indicators suggest the market is more active than typical for this time of year.

Strong Start to the Year

Rightmove reported a 2.8% jump in asking prices in January 2026. This is the largest January increase ever recorded on their index. It suggests sellers are entering the market with confidence.

Nationwide’s January data showed a 0.3% monthly rise and 1% annual growth. This continues the gradual upward trend seen in the final months of 2025.

Mortgage approvals have returned to near pre-pandemic levels. This indicates genuine buyer demand rather than speculative activity.

Stock Levels at 12-Year High

One of the most significant developments is the level of available stock.

Stock levels are at a 12-year high for this time of year. This gives buyers more choice than they have had in over a decade.

More stock means:

Buyers can take their time comparing properties
Sellers face more competition
Pricing accurately becomes essential

Price Reductions Common

Despite the strong start, the market remains price-sensitive.

One-third of properties on the market have had price reductions. This shows that overpricing is quickly punished.

In London and the South East, discounts are steeper. Agreed sale prices are averaging 6% or more below initial listing prices. In other regions, the discount is typically 3.5% to 4%.

For agents, this reinforces the importance of realistic valuations from day one.

Key Market Drivers

Several factors are shaping the market in early 2026. Understanding these helps agents advise clients effectively.

Interest Rates and Mortgages

The Bank of England base rate currently stands at 3.75%. This follows a cut from 4.00% on 18 December 2025.

The Monetary Policy Committee meets today (5 February 2026), with markets watching closely for signals about future direction.

Mortgage rates have been trending down. Some lenders now offer deals below 4%. This improves affordability for buyers and supports demand.

Affordability Improving

The house price to income ratio is at its lowest level in over a decade. This is significant for market sustainability.

For first-time buyers, the average mortgage payment now represents 32% of net pay. This is down from 38% in 2023. The improvement makes home ownership accessible to more people.

First-Time Buyers Dominate

First-time buyers were the largest buyer group in 2025, accounting for 39% of sales. This is a notable shift from previous years when movers and investors played larger roles.

Several factors explain this:

Improving affordability
Mortgage rate reductions
The desire to escape rising rents
Government schemes supporting first purchases

For agents, this means marketing should target first-time buyers. Properties suitable for this group – typically two and three-bedroom homes in accessible locations – are likely to see strongest demand. If you’re advising first-time sellers, our guide on selling your home for the first time covers what they need to know.

The Landlord Exodus Continues

The buy-to-let sector continues to contract. 93,000 landlords exited the market in 2025.

Tax changes, regulatory requirements, and rising costs have made property investment less attractive. This reduces rental supply and pushes more people towards home ownership.

For agents, the decline in investor activity means fewer cash buyers. It also creates opportunities to help landlords sell portfolios.

Outlook for Q2 2026 and Beyond

Forecasting property markets is never certain. However, the major indices have published their predictions for 2026.

House Price Forecasts

Source	2026 Forecast
Halifax	1% to 3% growth
Nationwide	2% to 4% growth
Rightmove	2% (GB), 1% (London), 3% (Scotland), 3% (Wales)
Zoopla	1.5% growth
Savills	2% growth

The consensus points to modest growth of around 2% for the year. This represents a continuation of the steady, unspectacular performance seen in 2025.

Regional Forecasts

Rightmove’s regional forecasts show the North-South divide persisting:

Great Britain overall: 2% growth
London: 1% growth (weakest)
Scotland: 3% growth
Wales: 3% growth

This suggests agents in northern regions and the devolved nations can be more optimistic than those in London.

Transaction Volumes

Transaction volumes are forecast to reach 1.18 million for 2026. This would represent an improvement on 2025 and signal a healthier, more liquid market.

RICS Sentiment

The Royal Institution of Chartered Surveyors provides valuable sentiment data. Their latest survey shows +24% of surveyors expecting values to rise over the next 12 months.

This positive sentiment supports the forecast for modest growth.

Long-Term Outlook

Savills has revised its long-term forecast, predicting 25% cumulative growth by 2030. This suggests the current period of stability is laying the groundwork for stronger performance in the latter half of the decade.

What This Means for Estate Agents

The data tells a clear story. Here is how agents can apply these insights.

Pricing Realistically Is Essential

With stock at 12-year highs, buyers have choices. Overpriced properties sit on the market and require reductions.

Price correctly from day one. Use comparable evidence from recent sales, not listings. Be prepared to explain to sellers why their neighbour’s asking price is not relevant – only sold prices matter. Sellers who get multiple valuations will quickly spot agents who overprice to win instructions.

Adapt to Regional Conditions

The North-South divide requires different approaches:

In northern regions and Wales:

Markets are stronger
You can be more confident with pricing
Emphasise value compared to southern markets

In London and the South East:

Manage seller expectations carefully
Price for the current market, not last year’s
Highlight the need to be competitive

Target First-Time Buyers

With first-time buyers representing 39% of the market, they are your key audience.

Highlight properties suitable for first purchases
Emphasise mortgage affordability improvements
Partner with mortgage brokers who can help buyers
Consider first-time buyer events or open days

Monitor Mortgage Rates

Mortgage rates are trending down. This supports demand.

Keep track of the best available rates. Share this information with buyers. The difference between 4.5% and 3.9% can be the difference between a sale proceeding or stalling.

Be Ready for the Spring Market

February and March typically see increased activity. The strong January suggests 2026 will follow this pattern. For more on seasonal timing, see our analysis of the best time to sell a house in the UK.

Ensure you have:

Enough stock listed
Staff ready for valuations
Marketing materials prepared
A clear strategy for handling increased enquiries

Conclusion

The UK property market has entered 2026 in better shape than many expected. Prices are stable, affordability is improving, and activity is picking up. The regional divide remains, with northern markets outperforming the south.

For estate agents, the message is clear. Price realistically, understand your local market, and focus on the first-time buyer segment. The agents who succeed in 2026 will be those who combine market knowledge with excellent service.

Data Sources

This analysis draws on publicly available data from the following sources:

All figures correct as of February 2026.

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