UK House Prices Forecast to Rise Moderately in 2026 as Affordability Improves
Nationwide forecasts that UK house prices will rise by 2-4% in 2026, driven by income growth outpacing price growth and improving affordability. The Bank of England rate is expected to fall from 4% to 3.75% as early as this Thursday, which could further support housing affordability.
The long-standing price divide between northern and southern regions has narrowed to a 12-year low in 2025. London remains the weakest performing area in early 2025, while northern regions have outpaced the south. Average northern prices have risen to about 58% of southern prices in 2025, up from around 48% in 2017.
The average price for a home remains near the all-time high recorded in summer 2022, though annual growth has slowed: from 4.7% at the end of 2024 to 2.1% in mid-2025 and to 1.8% in November 2025. Notably, the average mortgage for UK first-time buyers has reached a record high of £210,800.
A high-value council tax surcharge will not be introduced until April 2028 and will affect less than 1% of English properties, including about 3% in London. Meanwhile, new landlord taxes may reduce buy-to-let activity and limit new rental supply, potentially keeping private rental growth under upward pressure.
