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After a turbulent few years, the mortgage market is starting to show some signs of stabilising, but what could 2026 mean for property prices?
Fixed mortgage rates have eased over 2025 following cuts to the Bank of England base rate, with one or two further reductions expected in 2026. This has helped improve affordability for buyers.
But if you’re planning to purchase a new property, or to remortgage your home, you might be wondering what’s likely to happen to house prices over the next 12 months.
UK house prices only rose slightly in 2025, according to the Office for National Statistics with average property prices up 1.2% in the year to November 2025, to an average of £270,000 (£292,000 in England).
Nationwide recorded slightly higher annual growth at 1.8%. Robert Gardner, Nationwide’s chief economist said: “The word that best describes the housing market in 2025 is ‘resilient’. Even though consumer sentiment was relatively subdued, with households reluctant to spend and mortgage rates around three times their post pandemic lows, mortgage approvals remained near pre-Covid levels.
“Stamp duty changes that took effect at the beginning of April created volatility through the spring and summer. Activity spiked in March as purchasers brought forward transactions to avoid paying additional tax, and this led to some softness in the following months. However, the underlying picture was little changed as demand held up well throughout.”
In this article, we’ll take a look at what could happen to house prices in 2026, , and outline what house price movements could mean for you, whether you’re planning to buy, sell or remortgage.
What will happen to house prices in 2026?
Unfortunately, without the aid of a crystal ball, it’s impossible for anyone to say for sure whether average property prices will end the year up or down in 2026, especially as there are a whole host of factors that influence the way prices move.
That said, both government forecasts and lenders seem to agree that average prices may rise modestly over the course of the year. Interest rates are slowly starting to ease, and inflation fell sharply to 3.2% in the 12 months to November, although it remains higher than the government’s 2% target.
Property website Rightmove predicts that new seller asking prices will rise by 2% by the end of 2026, with improved buyer affordability and a good choice of homes for sale supporting stronger market activity.
Colleen Babcock, Rightmove’s property expert, said: “2026 will be a mix of some key property market themes continuing, and other new trends emerging. We expect many of those who put their moving plans on hold over the last few months will pick them back up again in the New Year, now the Budget is out of the way.
“We predict the market will look and feel very different depending on which area of Great Britain you’re in, and the type of property you’re looking to sell or buy, with big differences particularly between the south of England and the rest of Great Britain. The market conditions next year will favour typical first-time buyers over those at the top-end of the market.”
A dramatic fall in prices appears unlikely due to lower mortgage rates, which have helped boost buyers’ affordability.
Mr Gardner said: “Looking ahead, we expect housing market activity to strengthen a little further as affordability improves gradually (as it has been in recent quarters) via income growth outpacing house price growth and a further modest decline in interest rates. We expect annual house price growth to remain broadly in the 2 to 4% range next year.
“The changes to property taxes announced in the Budget are unlikely to have a significant impact on the market. The high-value council tax surcharge is not being introduced until April 2028 and will apply to less than 1% of properties in England and around 3% in London. The increase in taxes on income from properties may dampen buy-to-let activity further and hold down the supply of new rental properties coming onto the market, which could in turn maintain some upward pressure on private rental growth.”
Estate agency Knight Frank predicts house prices will rise by around 3% across 2026, slightly lower than previous forecasts, whilst Savills expects 2% annual house price growth.
What should I do if house prices go up in 2026?
If house prices increase year-on-year, then sellers may have a better chance of selling their homes for a higher price. Buyers, of course, would get the short end of the stick here.
Prices creeping even higher could put the dream of a new home out of reach for many people, particularly when combined with other factors such as steep rents and above-target inflation.
Can I remortgage if my house increases in value?
As you might expect, while falling property prices put remortgage customers in a weaker position, the opposite is also true: should the value of your property increase, you should be able to access better deals when you come to remortgage, as you’ll own a greater proportion of equity in your home.
If you’re worried about house prices going down over the next few months and are coming to the end of your mortgage deal, then now could be the perfect time to start looking for a new mortgage deal. Read our article Five good reasons to remortgage right now to learn more.
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Want to speak to a mortgage adviser? Speaking to an experienced adviser can help you to understand your options and get a great deal on your mortgage.
If you’re looking for expert mortgage advice, you can get a free consultation with an independent mortgage adviser at Fidelius. Speak with a qualified, FCA-regulated, independent mortgage adviser you can trust. Rated 4.7/5 on VouchedFor from over 2,600 reviews.
What should I do if house prices go down in 2026?
If demand does stay relatively low and prices dip, it could be an ideal time to strike from a buyer’s perspective, provided you can bag a good mortgage deal in the process. According to Halifax’s latest house price index, UK house prices fell by 0.6% in December, after dropping 0.1% in November.
Alice Haine, Personal Finance Analyst at Bestinvest by Evelyn Partners, the online investment service, said: “With the dust now settling on the Budget, and some relief that property tax changes will not kick in for a while, estate agents are hoping for a post-Budget surge in listings and buyer demand at the start of 2026, particularly as mortgage rates look more favourable.
“How much that will translate into higher prices will depend on the impact of the Chancellor’s latest property tax measures and wider economic challenges. Consumer sentiment remains subdued, with households spending cautiously amid rising unemployment, slower economic growth, and still-elevated borrowing costs compared to those pre-pandemic lows.”
If house prices continue to ease, homeowners looking to sell may find it harder to get the price they’re looking for. A prospective home mover could find a great deal on a new home, but may have to delay or cancel the purchase – or have to offer a considerable discount of their own if they can’t sell their current property to fund the move.
Can I remortgage if my house decreases in value?
There’s nothing stopping you from remortgaging just because your property has gone down in value since you purchased it, though it can make your borrowing costs more expensive.
That’s because a lower property price can push you into a higher loan-to-value (LTV) bracket, which limits the number of remortgage deals you will be eligible for, unless you elect to overpay your existing mortgage to compensate. Put simply, the lower the loan-to-value bracket you fall into, the wider the choice of lower cost remortgage options you’ll have, whereas the higher the amount you need to borrow relative to the property’s value, the lower the number of mortgage options you’ll have access to at competitive rates.
Even if falling prices do push you into a higher loan-to-value band, it’s still a good idea to take a look at your mortgage options and try and grab a new fixed rate deal so that you don’t end up rolling onto your lender’s Standard Variable Rate, which is usually much more expensive than other mortgage rates and likely to massively bump up your monthly payments.
It’s also really important to remember that even if house prices decrease over the next few months, this doesn’t mean that your house has gone down in value overall. If, for example, you purchased your house five years ago, it will almost certainly have increased in value between then and now thanks to the boom in property prices over the last few years, and even a 4% or 5% decrease in average prices over the next 12 months is unlikely to offset this.
In the event that the value of your property falls below the amount you have left to pay on your mortgage, you’d end up in a position of what’s known as negative equity, and be unable to remortgage at all. According to the government’s Moneyhelper website, it’s estimated that there are currently around half a million properties in negative equity in the UK, although some areas are affected more than others.
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Want to speak to a mortgage adviser? Speaking to an experienced adviser can help you to understand your options and get a great deal on your mortgage.
If you’re looking for expert mortgage advice, you can get a free consultation with an independent mortgage adviser at Fidelius. Speak with a qualified, FCA-regulated, independent mortgage adviser you can trust. Rated 4.7/5 on VouchedFor from over 2,600 reviews.
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