UK Residential Property Market Update Spring 2026

The UK residential property market entered 2026 with more stock, steadier pricing and a cautiously active buyer base, but momentum has softened as the quarter has progressed.

After a relatively resilient finish to 2025, the first months of 2026 suggested a market that was finding its feet. Supply improved, giving buyers more choice, and pricing remained broadly positive year-on-year.

However, by March, renewed macroeconomic and geopolitical uncertainty had begun to weigh on sentiment, tempering what had initially looked like a more confident start to the year, as Head of Residential Property, Gary Jeffries, explores.

A market with more choice, but less urgency

One of the clearest themes in Q1 has been the increase in available stock. Zoopla reported that the average estate agent started 2026 with 32 homes for sale, the highest level at the start of a year for eight years. In London, stock was up 16% year-on-year, and in the South East it was up 9%, reflecting a greater carry-over of unsold homes from late 2025.

That rise in supply has improved buyer choice and helped keep price inflation in check, particularly across southern England. It has also reinforced the need for realistic pricing. Sellers can still attract interest, but the days of assuming scarcity will do the work are behind us in many markets.

Transaction volumes, meanwhile, have eased. HMRC’s provisional seasonally adjusted estimate for UK residential transactions in January 2026 was 94,680, down 5% on December 2025 and marginally lower than January 2025. That suggests activity remains respectable, but not especially strong.

Key trends in the UK residential property market

• Housing supply has increased, giving buyers more choice
• House price growth remains modest across most indices
• Mortgage affordability continues to shape demand
• Regional markets are diverging across the UK
• Rental growth remains positive but is beginning to slow

UK house prices remain stable rather than strong

Across the main indices, the Q1 picture is one of modest annual growth and limited monthly movement.

Nationwide reported that UK house prices fell by 0.2% month-on-month in March on a seasonally adjusted basis, while annual growth edged up to 1.6% from 1.2% in February. Halifax’s February index showed annual growth of 1.3%, with the average UK house price at £301,151 and a monthly increase of 0.3%. Meanwhile, Zoopla’s February house price index put the average UK house price at £269,900, up 1.3% year-on-year.

Rightmove’s March data showed average new seller asking prices rising by 0.8% to £371,042, which it described as a typical seasonal uplift for this time of year. But importantly, annual asking price growth was still negative at -0.2%, underlining how price growth remains constrained despite the normal spring bounce.

The official ONS measure also points to a market that is still growing, but only modestly. Average UK house prices increased by 2.4% in the 12 months to December 2025, taking the average to £270,000, down from 2.8% annual growth in the prior release.

“Taken together, these indicators suggest the market is stable, but not accelerating. Buyers are still price-sensitive, affordability remains stretched in many areas, and stronger competition between sellers is preventing any meaningful rebound in values at a national level,” commented Gary.

Mortgage affordability has improved, but confidence is fragile

The Bank of England held Bank Rate at 3.75% in February, with a narrow vote, highlighting that policy remains finely balanced. That decision initially supported hopes that mortgage pricing might continue to ease through 2026.

However, by mid-March, market sentiment had become more cautious, particularly with the advent of the conflict in Iran. Rightmove noted that its average two-year fixed mortgage rate had risen to 4.51%, up from 4.24% a week earlier, as lenders responded to global uncertainty. RICS also reported that confidence had weakened, with renewed macroeconomic and geopolitical headwinds clouding the near-term outlook.

Regional divergence across the UK residential property market

Regional variation continues to be one of the market’s most important characteristics.

Zoopla said that greater supply in London and the South East was keeping price inflation subdued, with prices lower by up to 1% over the past year in some southern markets.

By contrast, supply in many other regions was broadly unchanged from a year earlier, supporting firmer pricing, with house prices up by as much as 3% in the North West. Rightmove also highlighted clearer north-south divides, with the North of England, Scotland and Wales showing stronger annual price performance.

This remains a market where local dynamics matter more than national headlines. Affordability, stock levels and economic fundamentals are shaping outcomes differently across the UK, and that pattern looks set to continue through the rest of the year.

The lettings market is still resilient, but rental growth is cooling

The rental market remains undersupplied in structural terms, but headline growth has eased.

ONS reported that average UK private rents increased by 3.5% in the 12 months to January 2026, down from 4.0% in December 2025, taking the average monthly private rent to £1,367. In England, average rents rose 3.5% to £1,423, while rental inflation was highest in the North East at 8.0% and lowest in London at 1.1%.

Gary comments:

“That moderation is notable after the sharp rental inflation seen in earlier periods, but rents are still rising faster than many households would welcome. For landlords and investors, the focus remains on income resilience, compliance, asset quality and operational efficiency rather than relying on outsized rental growth alone.”

UK Residential Property Market Outlook for 2026

When it comes to the UK housing market forecast for 2026, as at mid-March, the most credible reading of the market is that it is shaping up to be a year of modest movement rather than major recovery.

Supply has improved, prices remain broadly resilient and the market continues to function, but affordability constraints and economic uncertainty are limiting the pace of recovery. Mortgage costs remain the most important driver of activity, and any sustained shift in interest rate expectations will continue to influence buyer confidence.

Recent geopolitical developments, particularly the escalation of conflict involving Iran, have also introduced additional uncertainty into global energy markets. Rising oil prices could place renewed pressure on inflation, potentially delaying anticipated interest rate reductions in the UK.

“While the direct impact on the housing market remains limited at present, prolonged energy volatility could affect mortgage pricing and buyer sentiment over the coming months,” adds Gary. “In the meantime, pricing is still positive on most measures, supply has improved and there is enough transactional activity to show that the market remains functional. However, confidence remains fragile. Buyer demand is uneven and sentiment has softened again as mortgage rate expectations have become less favourable.”

According to Vail Williams’ residential property experts, the most likely near-term scenario is for low single-digit house price growth nationally, with continued outperformance from more affordable regional markets and a slower, more price-sensitive pattern across London and the South East.

Gary concludes: “Sellers who price competitively should continue to find buyers, but higher stock levels mean over-ambitious pricing is likely to be corrected more quickly than it was in tighter markets.”

For buyers, sellers and investors alike, the market environment in 2026 is likely to reward realism, careful pricing and a clear understanding of local market conditions.

For tailored advice on residential development, investment or land opportunities, our residential property specialists can provide strategic guidance based on local market conditions.