Published: 22/01/2026 By Alex Maile
With another year underway, we take a look at what 2026 has in store for the housing market. Will prices be going up or down? And, what about the rental market?However, before we do, I’d first like to wish you and your families a belated happy New Year. I hope you all had a wonderful Christmas and that 2026 brings you all you could hope for.
There is no doubt that last year, with all its political and economic uncertainty, was seriously topsy-turvy. It started off reasonably well, with the election providing a degree of clarity, but sentiment soon changed as concerns grew over what housing taxes there would be in the budget and mortgage rates remained stubbornly high.
Fortunately, the housing market proved remarkably resilient, with prices holding steady throughout. And, when mortgage rates finally started to come down, and the Autumn Budget proved less draconian than many had feared, the market ended the year on a high and prices up between 1% and 2%, depending on which indices you look at.
As a result of a build-up of pent-up demand, an improving outlook for mortgage costs and greater certainty over property taxes, 2026 has started with a bit of a bang. Rightmove has reported the average price of new homes coming to market in January is up 2.8% - the largest monthly rise since June 2015!
The broader outlook for 2026, though, is for prices to rise by around 1% to 2%, but in areas where affordability is more stretched, such as London, they could be a bit below that level. It is the first-time buyer sector that is expected to be the most active, as their mortgage costs and their access to finance improve.
In the rental market, evermore stretched affordability and fears of a landlord exodus over the looming Renters’ Rights Act (RRA) dominated 2025. In the event, there was no sign of landlords selling up in significant numbers and affordability constraints and falling migration numbers led to a slowing of rent rises from the highs of previous years. Average rents ended the year up by 2.6% and by 2.8% in London.
In 2026, the rebalancing of supply and demand and ongoing affordability issues will mean rent rises are likely to continue modifying to around 2%. In May, though, the first phase of the RRA will come into force, and this might lead to a few more landlords selling up, which could reduce supply, but push up rents and yields for those landlords that remain.
Well, that’s it for now. I’ll be back again next month, but if you want to take advantage of the January bounce, all you need to do is give us a call.