We expect a stronger than usual start to 2026 as buyers return to the market. The appetite to move home remains strong but affordability remains a constraint for those buying their first home or looking to trade-up to a larger home, which will keep prices in check.
Housing sales hit 1.2m in 2025 – the highest level for 3 years
Mortgage rate stability, higher incomes and mortgage affordability improvements support sales
Sales are higher but UK price inflation slows to 1.1% (1.9% in 2024)
First-time buyers are the largest buyer group in 2025 (39% sales)
Desire to move remains strong, subject to affordability
House prices projected to increase 1.5% over 2026
Estimated housing transactions total 1.18m in 2026
North-south divide in price inflation set to remain
Housing market confidence has improved over the past 2 years, supporting a steady recovery in sales and modest house price growth despite higher mortgage rates.
Rising incomes and stable mortgage rates have encouraged more home moves. In 2025, the number of homes for sale reached a seven-year high, with active sellers also driving demand.
Transactions are expected to reach 1.2m in 2025, up 9% on last year and in line with the long-term average, with the total value of sales rising to £367bn. A slight moderation to 1.18m transactions is expected in 2026.
Download the Zoopla House Price Index - December 2025 (PDF, 344KB)
Budget speculation dampened housing market activity in late 2025 beyond the usual seasonal slowdown, with Q4 recording the sharpest fall in sales agreed since 2022 as some buyers paused decisions.
Recent weeks have seen demand running 12% below last year, with sales agreed down 9%.
However, this slowdown will not affect 2025 transaction totals, as completions typically lag by around 5 months. The impact is expected to emerge in early 2026, contributing to a modest dip in sales to 1.18m.
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First-time buyers (FTBs) have been a driving force for increased sales and account for 2 in 5 sales. Existing homeowners buying a home with a mortgage account for 1 in 3 sales. Cash buyers account for just over 1 in 5 sales, while landlords using a mortgage account for 7% of sales
Improvements to the availability of mortgages since the spring boosted affordability for buyers using a mortgage. FTB numbers are on track to be 20% higher over 2025, which has pushed FTB’s share of all sales above the 2000-2024 average.
We expect FTBs to be the largest buyer group once again in 2026, but affordability and buying costs remains an important influence on what they can pay.
Despite increased home moves, house price inflation remains subdued. UK prices are up just 1.1% year on year, well below the 10-year average of 3.8%, as the market adjusts to higher borrowing costs and increased stamp duty.
A clear north–south divide persists. Prices are flat to slightly lower in southern England, down up to 0.6%, where affordability pressures are greatest. In contrast, lower prices in northern England and Scotland are supporting stronger growth, with inflation reaching 2.9% in the North West. This divide is expected to continue into 2026.
This trend is reflected in first-time buyer behaviour, with buyers targeting cheaper homes in London and the South, while paying more in regional markets, reinforcing faster price growth outside the South.
House price inflation varies sharply at a local level. Northern Ireland leads with growth of 6.7%, reflecting recovery from a low base and a more stable economic and political backdrop. The strongest price growth in Britain is concentrated in northern England and Scotland, including the Scottish Borders (4.7%), Oldham (4.4%), Kirkcaldy (4.2%) and Falkirk (4.2%), with further upside expected in 2026.
In contrast, prices are easing across parts of southern England, particularly coastal markets where double council tax on second homes and a return to office working are dampening demand. Truro is down 2.4%, with smaller declines in Torquay (TQ, -1.9%) and Bournemouth (BH, -1.8%).
London prices are softer in inner areas, with declines of up to 2% in parts of the west, reflecting high values and stamp duty costs. Most outer London markets, however, continue to see modest price growth of up to 1%.
The outlook for transactions and house prices in 2026 is largely down to the economic outlook, in particular the jobs market and incomes growth. The jobs market has softened over 2025 and while disposable incomes have been increasing at a faster pace, this is now starting to slow. Fierce competition in the mortgage market is keeping average borrowing costs close to 4% and rates are likely to edge lower in 2026.
To inform our forecasts, we have a model that tracks whether house prices are ‘over’ or ‘under’ valued. Higher mortgages over 2023 led to house prices being 20% ‘over-valued’ which explains why price growth has been subdued over the last 3 years as affordability was resetting. Today, UK house prices are ‘fairly valued’, which creates headroom for house prices to rise in line with incomes, assuming no large decline in average mortgage rates or any major loosening in mortgage lending.
We expect a release of pent-up demand over Q1 2026 as buyers return to the market, having delayed decisions in the run-up to the budget. We expect a stronger than usual start to the year in 2026.
This will support housing sales, which are expected to total 1.18m over 2026. The appetite to move home amongst UK households remains strong but affordability remains a constraint for those buying their first home or looking to trade-up to a larger home. It is very important that sellers remain realistic on pricing to secure sales in 2026, especially across southern England.
We expect sales volumes to remain elevated, close to the 1.2m long run average, with plenty of homes for sale which will boost buyer choice and keep price rises in check. Average UK house prices are projected to be 1.5% higher over 2026 with an annual average increase of 2.1% a year between 2027 and 2029 as housing affordability continues to steadily reset and supports the number of sales.
The Zoopla House Price Index (HPI) tracks the change in achieved sale price of homes - not asking prices. The index uses sold prices, mortgage valuations and data for recently agreed sales, with more input data than any other index. The methodology is designed to accurately track the change in pricing for UK housing. It’s a revisionary index and non-seasonally adjusted.
Additional notes on this month’s data:
Buyer demand, sales agreed and number of homes for sale compare the four weeks to 14 December 2025 vs same period in 2024
The Zoopla’ UK house price over/under valuation model compares actual house prices to a modelled ‘affordable house price’, which are based on incomes and mortgage rates. Using a long-run ONS series for the average household disposable income for all households in all tenures, we assume a fixed proportion of income (25%) is spent on mortgage repayments over time. Using the prevailing mortgage rate over time, we estimate the amount of mortgage that is affordable at the average mortgage term for home purchases. The average LTV is used to estimate the affordable house price for the average UK household. This figure is compared to the actual price of homes to get a measure of over/undervaluation.
Time to sell is from a property first listed for sale to the sale being agreed (sold subject to contract) - not completion, which takes a further 5 to 6 months on average.
The sales market in Scotland operates differently - homes are marketed with a survey - and the time to sell is faster than England and Wales.
We try to make sure that the information here is accurate at the time of publishing. But the property market moves fast and some information may now be out of date. Zoopla accepts no responsibility or liability for any decisions you make based on the information provided.
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