Despite a projected increase, getting on the property ladder could become slightly easier next year.
According to new research from the lender Nationwide, house prices in the UK are expected to rise by as much as 4% in 2026.
Robert Gardner, chief economist at the building society, said: ‘We expect housing market activity to strengthen a little further, as affordability improves gradually via income growth outpacing house price growth and a further modest decline in interest rates.’
While rising prices are a concern, the Financial Conduct Authority (FCA) announced plans on Monday (15th December) to help first-time buyers and self-employed people onto the property ladder.
Nationwide reported that average UK house prices stood at £272,998 in November and a 4% increase would raise this figure to roughly £282,918.
The Bank of England is widely anticipated to cut interest rates by 0.25% on Thursday. The lender said falling interest rates had supported the housing market this year, even as annual price growth slowed from 4.7% at the end of 2024 to 1.8% in November 2025.
Other forecasters predict more modest growth next year. Rightmove expects house prices to rise by around 2%, while Halifax predicts an increase between 1% and 3%, citing lower interest rates and easing inflation as factors that could offset slower wage growth and possible higher unemployment.
Mortgage expert Matt Smith said buyers could benefit from lower rates and slightly improved affordability.
‘Those who are seeing slightly lower house prices in their area compared to last year, and may have also had an end-of-year pay rise, will see their affordability improved further,’ he said. ‘Many home movers will also see that the amount that they can borrow has increased, as lender have been rolling out the loan-to-income and stress-rate changes that were permitted by the regulator earlier this year.’
Data from Moneyfacts shows average mortgage rates are falling, with two-year fixes at 4.84% and five-year fixes at 4.91%. Figures from Savills also indicate that rising wages and relaxed affordability assessments have enabled first-time buyers to take out bigger loans, with the average borrower securing £210,800 in the year to September.
Nationwide added that the price gap between Northern and Southern homes in England is narrowing. Properties in the North cost almost 58% of those in the South – the smallest difference since 2013.
Image: Simone Hutsch/UnSplash
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