UK House Prices Expected to Rise in 2026 as Interest Rates Ease
UK house prices are forecasted to increase by 2-4% in 2026, according to Nationwide. This rise is expected to be supported by income growth outpacing price growth and a modest decline in interest rates. A 4% increase would raise the average price from £272,998 in November 2025 to about £283,918.
The Bank of England is widely expected to cut rates by 0.25 percentage points to 3.75% in its upcoming decision. Rightmove also projects a 2% rise in 2026, noting that home-movers may benefit from cheaper mortgage rates and higher borrowing power due to looser stress tests.
The Financial Conduct Authority plans reforms in the mortgage market aimed at helping first-time buyers and the self-employed. These include simpler rules, more flexible products, better advice, and the use of AI by brokers. In response to FCA concerns that previous stress tests were too restrictive, lenders have been reducing the stress-test rate.
Regional price dynamics show the smallest north-south price gap since 2013, with northern prices around 58% of southern prices. The typical UK property price in November 2025 was £272,998, with annual growth slowing from 4.7% at the end of 2024 to 1.8% in November 2025.
