After a mixed and often volatile 2025, most major forecasts now point towards modest price growth rather than sharp rises or falls, helped by falling inflation, stabilising interest rates and wages growing faster than house prices.
The overall outlook for 2026 is more balanced and predictable, offering a clearer landscape for first‑time buyers.
What is the housing market outlook for 2026?
Prices in the UK housing market are now expected to rise modestly in 2026, after a period of mixed performance in late 2025. According to Nationwide, house prices could climb by between 2% and 4% in 2026 as affordability improves and mortgage costs ease slightly.
Latest government data shows that average UK house prices continued to hover around £270,000 towards the end of 2025, with modest year-on-year increases recorded in national house price indices.
While some short-term volatility remains in the market, with some dips in late 2025, major forecasters now predict positive price growth rather than sustained declines. This is based on lower expected mortgage rates and wages rising faster than house price inflation, which create the conditions for further growth which create the conditions for further growth.
House Price Growth Forecasts 2026:
OBR: 2.5%
Nationwide: 2–4%
Knight Frank: 3%
Zoopla: 1.5%
Savills: 2%
Are mortgage rates finally easing?
As 2026 gets underway, there are early signs that UK mortgage rates are starting to ease after a prolonged period of high borrowing costs.
The Bank of England held its base rate at 3.75% in February after a December cut from 4%, but opened the door to further reductions later this year. Analysts now expect the next cut could come as soon as March or April, potentially bringing the base rate down to 3.5%, which would encourage lenders to offer slightly lower fixed-rate deals.
However, any improvement is expected to be gradual rather than dramatic, as markets believe rates are nearing their floor.
Some lenders have already started to adjust their products in response: Nationwide has cut several fixed‑rate mortgage deals following the Bank’s base‑rate move, including two‑year and longer‑term options that are now lower than they were previously.
Meanwhile, market analysts suggest that mortgage pricing could drift down further toward the mid‑3% range over 2026 as competition increases and base‑rate expectations shift.
To summarise, mortgage rates are edging down, offering some relief for buyers and remortgagers, but 2026 looks set to be a year of steady normalisation, not a quick return to cheap borrowing.
What will renting costs look like in 2026?
Heading into 2026 rents in London are still expected to rise modestly. The good news for renters is that the pressure on rent costs is easing compared with the rapid increases of the past decade.
Forecasts from industry analysts like Knight Frank, Savills, and JLL suggest that London rental growth is likely to stay in the low single digits – around 3–4 %.
Rightmove data shows that London rents actually slipped slightly towards the end of 2025, with the average advertised rent around £2,716 and annual growth at its slowest since 2020, though a further ~2 % rise is expected in 2026.
Higher mortgage affordability may also allow some renters to buy, easing competitive pressure on the rental market.
Despite slower growth, London remains the UK’s most expensive rental market, with limited housing supply and strong long-term demand keeping upward pressure on rents.
Although London’s rental market remains underpinned by strong demand, several external analyses show that upcoming changes in the Renters’ Rights Act have prompted some landlords to sell their properties which may reduce rental supply at the margins.
Is homeownership more affordable in 2026?
Homeownership is becoming slightly more achievable in 2026, driven by easing mortgage rates and slower house price growth.
With wages now rising faster, affordability is improving for many first‑time buyers. Lower mortgage rates, even if reductions are gradual, mean monthly repayments are beginning to stabilise after years of volatility.
At the same time, rental growth is slowing, allowing some renters to consider buying sooner than expected.
The combination of softening mortgage costs and improving incomes means 2026 offers a more favourable environment for many buyers, particularly those using schemes like Shared Ownership to reduce deposit and monthly payment requirements.
Peabody New Homes in 2026
2026 marks an exciting year for Peabody New Homes, with a range of new Shared Ownership developments launching across London.
Shared Ownership at Southmere
Our Shared Ownership homes at Southmere in Thamesmead offer buyers an affordable way to own a modern and high quality home in one of East London’s most exciting regeneration areas.
The newest Shared Ownership homes are launching in February 2026.
Set beside the picturesque Southmere Lake, the Southmere offers modern design, green space, and great transport connections around London.
Shared Ownership at Southmere allows you to purchase a share of your home with a smaller deposit and lower monthly costs compared to buying outright, helping you step onto the property ladder.
Holloway Park
Holloway Park is set to become one of North London’s most exciting new neighbourhoods, bringing 1, 2 and 3‑bedroom homes to the transformed former Holloway Prison site in Islington.
The development will officially launch in summer 2026, offering both Shared Ownership and private sale options, with the first homes ready to move into from 2027.
Surrounded by 1.4 acres of new parkland and with quick transport links - just nine minutes to Caledonian Road and one stop from King’s Cross - Holloway Park blends modern living and unbeatable connectivity.
Deptford Edge
Deptford Edge in SE8 is comprised of 1 and 2-bedrrom Shared Ownership homes, all designed to Passivhaus standards.
The homes aim to bring year‑round comfort with lower energy use just moments from the Thames.
Launching May 2026, homes at Deptford Edge blend light‑filled interiors and private balconies with green space, the river walk (about 200m away) and excellent connections to Canada Water, Greenwich and the City.
Fish Island Point
For those looking to live in East London, Fish Island Point is set in the creative canalside neighbourhood of Hackney Wick (Zone 2), offering 1, 2 and 3‑bedroom Shared Ownership apartments.
Homes come with contemporary finishes, private balconies and some feature wheelchair‑adaptable layouts.
Hackney Wick Overground is a short walk away, giving fast links via Stratford to the Elizabeth, Central and Jubilee lines. Launching in Spring 2026, the development puts independent cafés, galleries and Queen Elizabeth Olympic Park on your doorstep.
North Gate Park
North Gate Park sits in a leafy corner of Haringey, close to Seven Sisters and Harringay Green Lanes stations. It is designed around Mulberry Gardens, a three‑acre landscaped park.
London Living Rent is coming to North Gate Park in April 2026, which will allow residents to pay a reduced rent and save towards a deposit. Homes feature sustainable touches like air‑source heat pumps, solar panels and private outdoor space.
For residents' convenience, the development includes proposed on‑site amenities such as a concierge, co‑working areas, a nursery and community spaces.
Frankham Walk
Frankham Walk launches in April 2026, a unique collection of private sale homes in the heart of Deptford.
These 1, 2, 3 & 4‑bedroom apartments and duplexes blend retained Victorian character with modern design, many set within the beautifully restored Frankham House.
Frankham Walk is minutes from Deptford High Street - known for its independent cafés, bars and creative culture.
The homes feature thoughtfully crafted layouts with integrated appliances and private terraces or balconies on most properties.
Residents also benefit from landscaped communal gardens, secure cycle storage, and excellent transport connections via Deptford, Deptford Bridge and Greenwich stations, offering quick links to London Bridge, Canary Wharf and the City.
Frequently asked questions about the housing market in 2026
2026 offers a slightly more favourable environment for first‑time buyers in the UK. Mortgage rates are beginning to ease, wages are rising faster, and overall affordability is improving.
With house price growth expected to remain modest, buyers face less intense competition than in previous years.
Schemes like Shared Ownership also continue to play a key role, helping first‑time buyers purchase with smaller deposits and lower monthly costs.
Rents in 2026 are still expected to rise, but at a slower pace than in recent years.
Forecasts point to low single‑digit rental growth, and late‑2025 data shows that some parts of London have already seen small declines.
While London remains the most expensive rental market, easing demand and improved mortgage affordability may take some pressure off renters.
For many buyers, 2026 is shaping up to be a more stable and predictable time to purchase.
Mortgage rates are edging down, house price growth is modest, and incomes are rising. For those ready to move, especially first‑time buyers using Shared Ownership, 2026 is likely to offer a more balanced market with fewer rapid price swings and greater long‑term certainty.
