UK house prices rebounded in January following a late-2025 decline, with analysts predicting moderate growth in 2026 as mortgage affordability improves. The average UK home price rose by 0.3% in January, reversing a 0.4% fall seen in December.
Prices are now around 1% higher than a year earlier, with the average home valued at £270,873. Property market analysts expect prices to rise by between 2% and 4% during 2026, supported by easing mortgage rates and reduced uncertainty following last year’s budget.
Market activity weakened toward the end of 2025 amid concerns over potential tax changes, but mortgage approvals have remained close to pre-pandemic levels. Analysts expect housing demand to gradually recover if affordability continues to improve.
Despite the positive outlook, some caution remains. Mortgage approvals are still below recent averages, and borrowing costs, while easing, remain elevated compared with pre-pandemic levels. In addition, many households are expected to refinance mortgages in 2026 at higher interest rates, which could weigh on consumer spending and housing demand.
Overall, the housing market is expected to see steady but restrained growth, with prices supported by lower rates but limited by ongoing economic pressures.
