Date Published 05 January 2026
🏠 1. House Prices & Market Activity in Early 2026
Modest growth but resilience after slowing price rises
• House price growth cooled sharply late in 2025, with annual UK growth slowing to about 0.6% in December — the weakest in over a year — amid cautious buyer sentiment and still-elevated borrowing costs. Property118+1
• Despite this slowdown, analysts characterise the market as resilient, with transactions holding up better than expected. Mortgage Professional
• Forecasts for 2026 project modest but broadly positive price growth (roughly +2–4%) as affordability improves slightly and interest rates ease. Mortgage Professional+1
• Rightmove and other housing portals expect new seller asking prices to edge up in early 2026, reflecting seasonal demand returning. Forbes
Analyst forecasts:
• Independent forecasters forecast around +3% house price growth in 2026, though this is slightly below earlier expectations due to ongoing affordability limits and regional variations. Knight Frank UK
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📉 2. Mortgage Rates and Borrowing Trends
Lender competition and early rate cuts shaping the market
• HSBC became the first major lender to cut mortgage rates in 2026, following a Bank of England base rate cut to 3.75%, potentially triggering wider rate competition. The Guardian
• This dynamic may make borrowing cheaper for new buyers and remortgagers, supporting modest demand growth. The Guardian
• Broader borrowing data shows consumer credit rising strongly, even as mortgage approvals dip slightly — suggesting households remain willing to borrow for property and other needs. Reuters
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🏡 3. Rental Market Pressures
Rents remain high and could rise further
• Rents in the UK continued rising through 2025, with increases driven by tight supply and landlord costs, making affordability for tenants a key issue. The Guardian+1
• Many forecasts suggest rent inflation will slow from its recent rapid pace, but will likely remain elevated relative to wage growth — especially in urban and high-demand areas. The Guardian
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💼 4. Landlord Sector Under Strain
Regulatory and fiscal changes are reshaping buy-to-let
• The buy-to-let sector is facing higher taxes, tighter regulation, and increased costs, which are pushing some smaller landlords to exit the market. The Guardian
• This structural shift risks reducing rental supply, potentially putting further upward pressure on rents if institutional build-to-rent doesn't fill the gap quickly. The Guardian
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🌍 5. Super-Prime & London Market
Luxury market still active despite broader slowdown
• London's super-prime market (homes sold for £15 million+) saw notable activity in 2025, with total high-end transactions topping £400 million and prominent buyers from overseas. The Times
• This niche continues to operate independently of broader mass-market trends, buoyed by global capital flows seeking safe and luxury assets. The Times
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📊 6. Regional Divergence and Structural Themes
Different parts of the UK behaving differently
• There's a noticeable regional divergence: some northern and midlands markets have been more resilient or shown stronger relative price growth than southern markets. Investropa
• Flats (especially in London) have underperformed relative to larger homes, as buyer preferences shift and affordability constraints persist. Estate Agent Today
• Long-term forecasts still show steady cumulative growth out to 2029–30, but short-term volatility and low transaction volumes reflect a market in transition. Knight Frank UK
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📌 Market Summary — Early 2026
Key takeaways for buyers, renters, landlords, and investors
Buyers
• Slight improvement in affordability and rate competition may help activity, but structural headwinds persist.
• First-time buyers remain an important demand driver.
Renters
• High rents persist even as growth slows; tight supply and landlord exits could intensify pressure.
Landlords
• Fiscal and regulatory burdens are squeezing smaller investors and reshaping the rental market supply.
Investors
• Long-term performance forecasts remain positive, but near-term growth is modest and regionally uneven.
