The UK housing market is set for a stronger-than-usual start to 2026 after a robust end to 2025, with pent-up demand expected to fuel a surge in activity as buyers return following months of Budget-related uncertainty.
According to new forecasts from Zoopla, average UK house prices are expected to rise by 1.5 per cent over 2026, supported by a release of delayed buying decisions as confidence improves in the new year. That renewed momentum is forecast to underpin total housing transactions of around 1.18 million next year, marking one of the busiest periods for home sales since the pandemic.
Zoopla expects price growth to remain uneven across the country, with the strongest increases, above 2.5 per cent, concentrated in the Midlands, northern England, Scotland and Northern Ireland. Lower average house prices in these regions continue to offer better affordability, which is driving stronger demand and faster price inflation compared with southern England.
This north–south divide is expected to persist throughout 2026. While house prices in northern regions and Scotland are rising steadily, values in southern England remain under pressure, particularly in London, where prices are down by up to 0.6 per cent year on year as higher stamp duty costs and stretched affordability weigh on demand.
Richard Donnell, executive director at Zoopla, said that while 2025 had been a solid year for home movers, activity slowed in the final months as buyers paused decisions ahead of the Budget. “Now the uncertainty has lifted, we expect a stronger than usual start to 2026 as buyers return to the market,” he said. “The appetite to move home remains strong, but affordability continues to act as a constraint, particularly for first-time buyers and those looking to trade up.”
Despite rising transaction volumes, house price growth has remained modest. Average UK house prices now stand at £270,300, up 1.1 per cent over the past year — well below both the 1.9 per cent growth recorded in 2024 and the long-term annual average of 3.8 per cent. Zoopla expects prices to grow at an average rate of 2.1 per cent a year between 2027 and 2029 as affordability gradually resets.
The housing market’s regional divergence is increasingly stark. Prices are rising fastest in the North West, up 2.9 per cent, and Northern Ireland, where values have jumped 6.7 per cent. At a more local level, the strongest price growth is being seen in areas such as the Scottish Borders, Oldham, Kirkcaldy and Falkirk. By contrast, prices are falling in parts of southern and coastal England, including Truro, Torquay and Bournemouth, where changes to second-home taxation and a return to office working are dampening demand.
First-time buyers are playing a growing role in the market, supported by improved mortgage availability and stronger household income growth. Their numbers are on track to be 20 per cent higher in 2025, accounting for nearly two in five purchases. However, this greater borrowing power is not translating into higher-value purchases, particularly in London, where first-time buyers are targeting cheaper homes than a year ago to offset higher transaction costs.
Zoopla’s analysis suggests that while the volume of sales is improving, sellers will need to remain realistic on pricing, especially in southern England, to secure deals in 2026. With plenty of homes for sale and buyers increasingly price-sensitive, the coming year is likely to reward flexibility rather than over-optimism.
As Donnell put it: “Homeowners looking to move in the year ahead should understand the value of their home and what they can afford before starting their property search. The market is active, but it remains a buyers’ market in many parts of the country.”
