House Prices
National house price indices indicate a stabilising market following subdued conditions during 2025.
Average UK house prices are reported at approximately £271,000, reflecting modest annual growth
of around 2–3%, with notable regional variation. Index data from Nationwide and Halifax both point
to low but positive annual growth and limited monthly volatility.
Economic Conditions and Interest Rates
The wider economic backdrop has become more supportive compared with the peaks of the
interest rate cycle. The Bank of England Base Rate stands at 3.75%, while the effective interest
rate on newly drawn mortgages is reported at approximately 4.15%. Although borrowing costs have
eased, affordability constraints remain by historic standards.
Mortgage Lending
Mortgage lending activity reflects a mixed but improving picture. Net approvals for house purchase
were approximately 61,000 in December 2025, while remortgaging activity increased as fixed-rate
products matured. UK Finance forecasts gross mortgage lending of around £300 billion in 2026,
supported largely by refinancing and a gradual improvement in affordability.
Sales Volumes and Transaction Activity
Residential transaction volumes have stabilised. HMRC data indicates approximately 100,000
residential transactions in December 2025, representing an increase on the same period in the
previous year. While activity remains below long-term averages, the data suggests a steady and
functioning market.
Market Sentiment and Outlook
Market sentiment remains cautious but has shown early signs of improvement. RICS survey data
indicates that buyer enquiries and agreed sales remain negative overall, although both measures
have improved modestly. Looking ahead, the outlook for 2026 is for broadly stable market
conditions, modest house price growth, and steady transaction levels, subject to economic
performance and further movements in interest rates.
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