New Year New Market?
- House prices across England & Wales fell MoM to £286,148, but are still higher by 1% YOY.
- The base rate fell to 3.75% in December. I do not expect to see any change to the base rate in February.
- It's faster, on average, to find a buyer in January, than in May.
- House prices in prime central London are down by 25% since 2024.
- New Build Prices are £111,000 more expensive than average.
The pre-Christmas Bank of England base rate cut gives 2026 the start it needs. With 1.9 million mortgages maturing this year, mortgage rates are expected to fall below 3% by the end of 2026, offering a great opportunity to secure another 2 or 5-year fixed-rate deal.
The remortgage market was already showing signs of growth in November, with a 16% increase in mortgage approvals from last year. I expect to see further growth throughout 2026 as mortgage rates are set to continue falling.
As for the housing market as a whole, January is set to be busier than previous years following the base rate change and the Budget. The pent-up demand from buyers who held off making a move should make for a great start to 2026. Industry experts are expecting the base rate to fall to 3.25% by the Autumn.
House prices fell in December
The Halifax reported that UK house prices fell by 0.6% in December and finished the year 0.3% higher than 12 months ago. This meant that the average home was worth £297,755, and Halifax's numbers align with recent data from Nationwide, which also reported that prices fell at the end of last year.
While this may feel like a subdued close to the housing market in 2025, overall activity levels were resilient over the last year and broadly in line with the pre-pandemic average
Source: Amanda Bryden, head of mortgages at Halifax
Don't wait for spring to list your property
Historically, January was one of the quieter months for listing your property for sale, but could you be missing out on the best time to sell? The Spring market is often flooded with properties and potential buyers; however, your property can often get lost amongst the crowd.
Leading estate agents suggest that listing your property in January could attract a "better buyer"; someone more focused on making an offer, instead of just window shopping. I feel the housing market is less seasonal now than in previous years and is, in fact, more affected by external factors such as politics or base rate changes.
According to data from Connels, January is the second-fastest month to sell, taking sellers just one day longer (42 days) to find a buyer than in February to April (41 days)
People seem to think we lose all our buyers in the winter. We don’t. We actually probably have the same number of buyers but they have less to choose from. It usually takes fewer viewings to get an offer in winter than in spring, when stock levels are at the highest...
Spring buyers play the field more, view lots of properties and cherry-pick the best. Winter buyers are often seriously motivated, needing to move for a particular reason. To come out in the cold, wind and rain — guess what, you must really want to buy a house.
Source: Claire Carter, a country estate agent with John D Wood & Co
Will mortgage rates go down in 2026?
As I predicted, the base rate fell in December to 3.75% on the 18th December. With the base rate continuing to fall steadily, mortgage rates may drop below 3% in 2026 for the first time in years, allowing many first-time buyers to enter the market, as well as freeing movers who've been trapped by high rates.
Fixed-rate deals are guided by the swap market. Following the December cut, we have seen fixed rates fall into the high-3% range (e.g., average 5-year fixed deals around 3.75%, down from 4.4%, 2 year fixed deals as low as 3.6%)
Lower fixed-rate deals from years ago (before the 5.25% peak) are expiring. This means securing a new deal early is key to avoiding the high Standard Variable Rate (SVR), which remains at about 7.6% across all lenders.
As long as inflation remains under control, we may well see another modest fall in February. However, if companies begin charging more this year to cover their increased costs, inflation is likely to rise.
The upcoming MPC announcements on Bank Rates are on the 5th February, 18th June, 30th July, 17th September, and 5th November. I do not expect to see any change to the base rate in February.
Property sales volume has a way to catch up after 2025's SDLT adjustments
England & Wales
The bottleneck caused by the increase in SDLT in April brought a huge number of property sales forward into March, and slashed sales volume by 47% YoY in April. Throughout the year, the shortfall has been decreasing, and the gap has shrunk from a half to a third (35% in August).
This recovery has been slow with uncertainty around November's Budget. With all but the most expensive properties being largely unaffected, I expect the data for the rest of the year to reflect what we're seeing here at SAM: a quietly confident return to healthy market activity.
Despite the subdued market and seasonal decline, average house prices have held higher than the previous year. The key driver is the sustained demand from the entry-level sector, with first-time buyers consistently showing the greatest annual growth amongst all cohorts.
- The average price for first-time buyers is now £240,600, a 1.6% annual rise.
- Owner-occupiers paid an average of £346,563 (up 0.9% year-on-year).
- Cash buyers averaged £272,424 (up 0.4% year-on-year).
London
London continues to face challenges. The average property price is now £547,468 (October 2025), representing a 2% decrease both MoM and YoY, for the second month in a row.
London's higher prices have been harder hit by the cost-of-living squeeze, and the volume of transactions remains far lower, relatively, than the rest of the country on average. Completed sales for August were 4,719, marking a steep 44% dip from August 2024's volume of 8,392. In contrast with the rest of the country, the shortfall is not closing; it's grown from 28% since May.
Has the budget killed the London Housing Market?
Last month, we reported that this combination of falling prices and a near-halving of transactions confirms London's high-value market is particularly vulnerable to economic and policy uncertainty. Just last week, The Times reported:
Homes in the most expensive areas of London have lost a quarter of their value in little over a decade, as higher taxes have led to a correction in the market.
An analysis by Savills shows that prices in the prime central London market, which it categorises as being homes sold for £4.5 million or more, have fallen sharply amid higher stamp duty for purchasers and the end of non-domicile tax status, which has triggered an exodus of wealthy residents.
The estate agency calculates that the average price in this bracket fell by 4.8 per cent in 2025, with a 0.9 per cent decline in the final quarter of the year — contributing to a 24.5 per cent downturn since the market peaked at the end of 2014.
Source: David Byers for The Times
I think the mansion tax may stimulate movement as the top-end market in London considers downsizing earlier, rather than sitting on property as it appreciates into the tax bracket, allowing growing families to climb the ladder. The housing market needs movement, instead of homeowners remaining put.
Meanwhile, the more affordable areas of London are seeing strong price growth, with the Boroughs of Havering, Waltham Forest, and Lewisham reaching all-time highs this Autumn (City AM).
Mortgage approval reports
Home buyers
House Purchase Mortgage Approvals in November 2025 fell by 1% month on month and 2% year on year to 64,530, but this was due to buyer hesitance anticipating the potential for disaster in the anticlimactic budget. As the data for December is released, we expect to see more mortgage approvals for buyers taking advantage of new, low fixed-rate deals, now freed from budget anxiety.
Remortgages
Remortgage Approvals reached 36,555 in November 2025, up 10% on October and 16% on 2024. Remortgagers were less perturbed by budget apprehension and were able to switch as soon as lenders offered lower fixed rates based on falling inflation and the predicted December base rate drop.
Now that market conditions are stable and both have returned to 'normal' pre-pandemic levels, I predict approvals for homebuyers and remortgages to settle into a steadier rhythm in 2026.
How many new-build properties are being built?
Housing completions have fallen year on year for the 4th quarter. There were 36,160 completed new builds in the 2nd quarter of 2025; 19% lower than the previous year. The new build pledge set by the Government would require the quarterly completions to be 75,000. It'll take more than budget pledges to achieve this target.
New Build Prices are £111,000 more expensive
The average house price for a new build is £401,305, which is £111,241 higher than the average house price of a property in England and Wales. This gap has been widening since November 2024, but the sharp falls in May and August may indicate they are reaching a plateau.
Andrew Boast FMAAT
CEO of SAM Conveyancing
Mortgage rates drop, just in time for the 1.9 million homeowners needing to remortgage in 2026.
I am predicting two further rate cuts in 2026, but the next move won't be until the summer.
This year is going to be more buoyant than 2025 as there is greater assurance around lending, and more sellers coming to the market. I wouldn't, however, rely on developers to meet the new build targets pledged by the Government, even with the new changes within the budget.
Sources: Latest data from - Gov.UK, Bank of England, UK House Price Index, ONS and Propertymark (NAEA).
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