The UK housing market to shift from subdued to steady as prices rise in 2026

• House prices across the UK's mainstream housing market to increase between two and three per cent in 2026 as normality resumes.
• An uptick in supply will soften house price growth despite rising demand.
• The prime country homes market across the UK regions is set to bounce back after almost freezing up ahead of the Budget.
• As commuters continue to be called back to the office they will try to balance value and convenience in 2026.
• Pricing remains crucial and buyers will be cautious next year after the turbulence of the early Twenties.

National outlook
House prices will rise between two and three per cent next year as the UK’s housing market shifts from subdued to steady, and normality resumes for the first time since the pre-Covid era, according to new findings from national estate agent Jackson-Stops.

The Chancellor’s recent Budget has now passed, easing immediate concerns around more punitive wealth and property taxes, albeit perhaps not permanently. Combined with anticipated interest rate cuts, this is likely to give many vendors and buyers the confidence to move forward with their plans and make a move.

In January, it will be six years since the 'Boris Bounce', the onset of Covid-19 and a prolonged period of disruption and uncertainty in the housing market. The six-week closure of the housing market was followed by the race for space, boosted by the short-term stamp duty holiday. The 2022 emergency budget threw the housing market into turmoil as historically low interest rates soared and post-Covid inflation took hold.

Unnaturally high price growth in coastal and rural Britain then began to unravel, expedited by the sell-off of second homes under pressure from the increasingly heavy burden of regulation on individual landlords and second home owners. 2024 and 2025 were dogged by political instability around the general election and leading up to a well-trailed budget.

Nick Leeming, Chairman of Jackson-Stops, comments: "Interest rates are expected to settle in the mid-threes, already factored in by many mortgage lenders. This improving outlook is helping to restore confidence across the market. The first quarter of the year is set to be particularly busy, driven by pent-up demand that built ahead of the Budget and is expected to carry through into next year, reinforcing a spring bounce that should be more pronounced than the long-term norm.

“While much of the industry was uneasy about the kite-flying in the run-up to the Budget, the final outcome was better than initially feared. This has created the conditions for an unexpected ‘Reeves rebound’, giving buyers the reassurance they needed to proceed with their plans and move forward.

“Following almost six years of exceptional volatility driven by Covid, fiscal shocks and political uncertainty, 2026 is now expected to mark a return to a more stable and recognisable housing market.”

Prime regional markets to rebound in 2026
Labour’s proposed mansion tax, due to be introduced from 2028, appears less impactful than initially suggested. The annual levy is set at £2,500 for homes valued above £2 million and £7,500 for properties exceeding £5 million. Jackson-Stops expects this to have little effect on buyer appetite at this level of the market, though there are concerns around how properties will be valued in practice and how the valuation process will be administered.

Nick Leeming, Chairman of national estate agency Jackson-Stops, comments: “Council tax reform is long overdue, but it’s far from simple. The current system is still based on property bands set in 1991 using “drive-by” valuations and even then the process cost around £19m to do. Trying to repeat something on that scale today would be hugely expensive, and relying on automated valuation models (AVMs) instead is not a realistic alternative for accurate results.

“While AVMs may offer a faster alternative, they are notoriously unreliable for higher-value or unique properties, risking significant inaccuracies. That raises serious questions about how updated valuations will be established in practice, whether they will come from statistical modelling, market data, or a hybrid approach, and how disputes will be managed. Errors or inconsistencies could open the door to appeals and legal challenges.”

While the full implications of council tax reform remain some way off, the Budget has already acted as a catalyst for buyer activity in the prime market. In fact, Jackson-Stops agents report a flurry of offers, exchanges and completions of deals worth more than £1,000,000 in the immediate aftermath of the Budget, most notably in prime central London (PCL), Cheshire’s Golden Triangle and the Cotswolds. This initial December rush, unusual for two weeks before Christmas, may be an early indicator for the spring selling season. According to Jackson-Stops agents, vendors are lining up to either launch in January or are preparing for sale in the spring.

Nick Leeming, Chairman of national estate agency Jackson-Stops, comments: “The urgency to agree deals in December suggests that buyers believe the prime regional market offers good value for money and they want to secure their property at that price now. The market is set for a modest uplift next year.”

Research from Jackson-Stops on the prime market supports this rebound. To buy the top one per cent of homes outside London you need 25 per cent less than three years ago, from £1,670,000 in 2022 to £1,250,000 in 2025.

Nick Leeming, Chairman of national estate agency Jackson-Stops, comments: “For decades, the prime market has defied gravity, consistently outpacing every other segment. Our data shows that 2022 was likely the peak of that 30-year cycle with realignment happening ever since. Prices at the very top have been, on average, softening faster than any time since records began, but this trend looks set to change.”

This softening seems to have ended with the autumn Budget as is evident in the following locations.

Regional focus
A post-Budget bounce in Alderley Edge
Crispin Harris, Director of Jackson-Stops Alderley Edge, comments: “After a strong start to 2025, the Cheshire Golden Triangle, stretching from Wilmslow through Prestbury and Knutsford to Alderley Edge, experienced the same pre-Budget slowdown this year as Manchester’s high-end urban markets, including Hale. Buyers sat on their hands with no idea really about what would emerge in the Chancellor's speech, this hesitancy set in from July as speculation around the Budget began unusually early this year.

“However, in the fortnight since the Budget, we have processed £20 million worth of offers pointing towards a very busy January. The deals that have already been done this year, especially pre-July, also reveal micro trends in the Cheshire market.

“Interestingly, despite construction costs, estates and doer uppers have achieved multiple viewings and competitive offers when we have hit that pricing sweet spot. Realistic pricing is crucial right now. Amenities have also been an important driver with bustling high streets in the likes of Alderley Edge pulling buyers in as well as newer facilities such as padel courts. Those homeowners who have built their own are suddenly very popular.”

Pimlico – bucking the PCL trend
Harry Buchanan, Sales Board Director at Jackson-Stops Pimlico, comments: "The market in Pimlico has outperformed many of its well-established neighbours. For us, 2025 has been busier than 2024, with more sales and higher-priced homes on the market.

"It is all about getting the price right. We are averaging 96% of the asking price. Buyers are coming from all directions, with strong financial support from families remaining a key factor. Earlier this year, over 50% of homes were purchased with cash, as parents help their grown-up children get on the property ladder. There is still a high demand from overseas buyers, and the pied-à-terre market is holding up nicely. We’re expecting a Boxing Day lift into next year as stock levels start to pick up."

The irrepressible Cotswolds
Rupert Wakley, Director of Jackson-Stops Chipping Campden & Burford, comments: “Throughout 2025 the Cotswolds market has been busy. Closer to the Budget when the top end paused, deals kept ticking over between £500,000 and £1,250,000. Demand from local upsizers and downsizers is continuous in the Cotswolds and although the stream of relocators from London has naturally slowed from pandemic highs, that deal flow is constant too. Prices have been five to 10 per cent below the 2022 peak, so perceived value has encouraged people to transact.

"We have agreed eight sales since the Budget and have 16 in the pipeline from £300,000 to £3,000,000. We are launching properties between Christmas and New Year and preparing for a busy spring market.

"With VAT on private school fees, mansion tax and other heightened costs, the good state schools in the Cotswolds are a real draw. The Cotswolds School and Chipping Camden school, for example, bring families to the area, especially to the northern tip of the Cotswolds which presents more value for money. An increase in supply will curb house price rises and I expect to see two to three per cent growth in 2026."

The emerging Norwich market
David Lambert MRICS, Director of Jackson-Stops Norfolk Offices in Burnham Market and Norwich, comments: “While some parts of North Norfolk with a higher concentration of second homes have seen a more measured market this year, this reflects a positive shift in buyer dynamics rather than a lack of demand. Compared with the height of the pandemic, when second-home purchases dominated many coastal markets, there is now a far greater emphasis on permanent moves. More buyers are choosing Norfolk as a long-term place to live, which is helping to create a more balanced and sustainable market.

“Buyer behaviour has also matured. Rather than speculative activity, purchasers are making considered decisions, with a clear focus on value, condition and long-term suitability. While rising build costs mean fewer buyers are taking on major projects, well-presented homes in the right locations continue to attract strong interest. This is now a more considered market.

“Norfolk remains an incredibly desirable place to live, and Norwich continues to offer excellent value compared with nearby cities such as Cambridge. I expect market activity next year to build through the spring and summer as confidence continues to strengthen.”

Price alignment needed in the new homes market
Sarah Walsh, Head of New Homes at Jackson-Stops, comments: "The new homes market in the regions, especially in the east, is being driven by downsizers. Stretched affordability is preventing first-time buyer purchases while the cost of living means upsizers often choose an existing home because in the immediate term it seems cheaper relative to the new build premium.

"Economic pressures mean that buyers have lost sight of the longer-term cost saving (such as reduced energy bills) that comes with a new home. Suffolk has outperformed Essex and Kent attracting relocators and downsizers who, in just over an hour from the capital, find themselves surrounded by natural capital.

"What is clear is that pricing needs adjusting in the current market for new developments within the London commuter belt and the further reaches of the southeast. I expect realignment of pricing and buyer budgets next year unless we see support from the Government in the spring statement in the form of a buy-side incentive such as stamp duty cuts. I would also like to see the alleviation of the budget of CIL (community infrastructure levy) which is wiping out any developer profit. This will help them focus on delivering real quality."

Lettings outlook
Sarah Leslie, Lettings Manager at Jackson-Stops Sevenoaks, comments: “While rents have remained robust throughout 2025, we are seeing clear price sensitivity among tenants. Properties marketed above the prevailing rate are taking longer to let, whereas correctly priced homes continue to perform well. This trend is evident across all levels, as households remain highly conscious of their budgets.

“Sevenoaks remains a supply constrained market, with tenant demand continuing to exceed available stock. While renters are increasingly price sensitive, the lack of supply, particularly for well-located family houses, is continuing to underpin rental values.

“Although some landlords have chosen to sell this year, this cannot be attributed solely to the forthcoming implementation of the Renters’ Rights Act or proposed EPC changes. Rather, it reflects the cumulative impact of regulatory and cost pressures over the past decade. For well-prepared landlords working with experienced agents, these reforms are manageable. The changes have, however, reinforced the importance of professional advice, particularly around tenant suitability and compliance.

“Tenant priorities have also evolved and we expect these trends to persist into 2026. Demand remains strongest for houses with private outdoor space, alongside properties offering good access to amenities and transport links. With more businesses requiring a return to office-based working, proximity to railway stations has become increasingly important, especially as station parking can be limited and costs continue to rise. As a result, tenants are more focused than ever on value for money.

“Looking ahead, we expect rents to continue rising. Further regulatory changes, including tax adjustments and mandatory landlord registration, will increase costs for landlords, which are likely to be reflected in rental pricing. In this environment, accurate pricing and informed, strategic management will be critical.”

Alex McConnell, Head of Jackson-Stops' London Lettings: "Pimlico is considered a strong lettings hotspot for landlords for a combination of location, tenant demand, property stock and rental performance. These fundamentals make the Pimlico Grid - streets such as Winchester Street and Cambridge Street - especially coveted by landlords. Just last week, we let a two bedroom split-level home on Sutherland Street that had sat on the sales market for six months, but it received three offers over asking on the first day.

"The yields we have recently achieved range from 3.8%–6.3%. Obviously 6.3% is very high and not the norm, but it is possible! Recently, yields for one- and two-bedroom flats have ranged from 3.8%–4.7%.

"Looking ahead to 2026, I anticipate yields in Pimlico shall continue to rise. With over-asking offers restricted, headline rents are likely to rise, and with our average fixed terms now stretching to 36 months, landlords stand to benefit from long term, secure tenancies."