What are experts predicting for the 2026 housing market? Over the last five years, we’ve seen rapid growth in house prices during the peak pandemic years of 2020 – 2022, followed by slower but steady growth up to 2025. As of November 2025, house prices were up 2.5% compared to the previous year.
Meanwhile, the rental market has seen continuing high demand, with potential renters competing aggressively for available properties.
In contrast, 2026 is predicted to be the most Gen Z-friendly housing market in recent memory. Falling house prices and mortgage rates will combine to make buying a first home more accessible for millions of young people in the UK.
In the rental market, the introduction of the Renter’s Rights Act may increase demand for rental property from overseas, but will also improve the quality of available housing and make the process of starting a tenancy fairer for renters.
House prices are projected to fall in 2026
One of the most surprising predictions for the 2026 housing market is a drop in house prices. Typically, factors like falling mortgage rates (see below) would lead to a jump in average property prices. However, a number of factors have combined to leave experts predicting an overall fall in average prices.
One of the biggest is a shift in both the supply and demand for housing. The 2026 housing market has opened with an almost unprecedented supply of properties. Estate agents in the UK currently have the highest number of properties available that they have had for 8 years, whereas buyer demand has dropped by around 10%.
The increased demand is in part due to the ‘Landlord exodus’. Private landlords are leaving the property market entirely in 2026, increasing available properties to buy and thereby driving down prices. This is in part due to the passing of the Renters Rights Act, which increases potential risk for landlords by restricting rent increases and banning no-fault evictions.
The most significant price drops are expected for flats and properties across London and the South East – typically the most expensive in the UK.
Mortgages will be more available – and cheaper
Falling mortgage rates and increased availability also spell good news for buyers in the 2026 housing market. At the start of the year, mortgage product availability is the highest it’s been for 18 years. Lenders are loosening restrictions for lending, which is particularly good news for first time buyers.
Mortgage rates are also reaching new lows, making borrowing more affordable as well as accessible. In August 2025, the average fixed-rate two-year mortgage rate dropped below 5%, and has continued to fall since then. A cut to the Bank of England base rate in 2025 is expected to keep the cost of borrowing low and make the 2026 housing market more buyer-friendly than ever.
Is the 2026 housing market the most Gen Z-friendly yet?
Not every expert is predicting a drop in house prices in 2026, but even the most ambitious outlook for the market shows modest growth rather than skyrocketing prices. One prediction that seems almost universally supported is that the key drivers of demand for homes will come from first-time buyers, particularly younger people looking to take their first steps on the property ladder.
Robert Gardner, chief economist for Nationwide, has predicted a drop in the proportion of income buyers will have to spend on their mortgage. In 2023, typical buyers spent more than 38% of their income on their mortgage. By the end of 2025, this had fallen to 33%, and he predicts it to continue to fall this year.
