‘With further interest rate reductions expected, property prices set to grow’

THE average price of a home in the UK increased by
1.7 per cent in the year to October, according to the Office for National Statistics.

Analysts at Nationwide are predicting a steady rate of growth for the UK property market in 2026.

With affordability becoming slightly easier for homebuyers, demand is expected to ensure that house price growth is within the two to four per cent range over the coming year.

The building society’s chief economist, Robert Gardner, said: “The word that best describes the housing market in 2025 is ‘resilient’.

“Even though consumer sentiment was relatively subdued, with households reluctant to spend and mortgage rates around three times their post-pandemic lows, mortgage approvals remained near pre-covid levels.

“Stamp duty changes that took effect at the beginning of April created volatility through the spring and summer.

“Activity spiked in March as purchasers brought forward transactions to avoid paying additional tax, and this led to some softness in the following months. However, the underlying picture was little changed as demand held up well throughout.”

Meanwhile, Amanda Bryden, head of mortgages at Halifax, said: “Average house prices were broadly unchanged in November, edging up by £139 compared to October, with the typical property now costing £299,892. Annual growth has slowed to 0.7 per cent, the weakest rate since March 2024, though this largely reflects the base effect of much stronger price growth this time last year.”

She continued: “While slower growth may disappoint some existing homeowners, it’s welcome news for first-time buyers. Comparing property prices to average incomes, affordability is now at its strongest since late 2015. Taking into account today’s higher interest rates, mortgage costs as a share of income are at their lowest level in around three years.

“Looking ahead, with market activity steady and expectations of further interest rate reductions to come, we anticipate property prices will continue to grow gradually into 2026.”