The UK housing market is showing signs of stabilisation, although a degree of nervous energy persists in the run up to the 26 November Budget. Nationwide reported that house prices rose by 0.3 percent in October, leaving growth at 0.9 percent over the past quarter and 2.2 percent over the past year. The direction of travel is still positive, but the rate of increase has been losing a little momentum recently.
Transaction activity has been holding together better than many expected. Early estimates suggest that completed sales in September slightly exceeded pre pandemic norms for the same month. Data from TwentyCI also indicates that sales across most price points continued at broadly typical levels through September and October. Even so, there is a sense that the market is bracing itself. Any shifts to property taxation in the Budget could prompt buyers to pause or renegotiate, raising the risk of a spike in fall throughs. Prime markets, which tend to be the most exposed to fiscal uncertainty, have shown more resilience in activity than one might expect, although agents are reporting gentle softening in achieved prices.
The wider economic backdrop adds an extra layer of intrigue. Inflation held steady at 3.8 percent in September and some mortgage lenders have trimmed rates at the margin. The Bank of England’s Monetary Policy Committee only narrowly opted to hold the base rate at 4 percent, a close call that has fuelled speculation that a final rate cut before year end is still possible. Such a move could help unlock some pent up demand, although sentiment is likely to remain cautious until the fiscal picture is clearer.
Against this mixed backdrop, expectations for price growth remain modest. Current forecasts point to around 2 percent growth in 2026, with the Budget’s reception in the financial markets expected to be the single biggest determinant of how the coming year unfolds. From 2027 onwards the outlook becomes more upbeat, with value growth returning in real terms as the wider economy strengthens. More affordable northern regions are expected to see the strongest gains over the longer term, continuing a trend that has been developing over several years.
Zoopla recorded annual rental growth of 2.2 percent in September, unchanged from August and notably cooler than the pace seen through much of 2022 and early 2023. Scotland and Yorkshire, areas that had already slowed sharply, saw a slight uptick to 1.6 percent, although this looks more like a flicker than a renewed surge. The Renters’ Rights Act received Royal Assent in late October, but there is still no timetable for implementation. Landlord groups have stressed that the sector will need at least six months to adapt once details are confirmed.
Localised data from July illustrates how uneven the picture has become. Some of the strongest house price rises were recorded in Scotland and the North, with Middlesbrough and Manchester both seeing annual increases above 8 percent. At the other end of the spectrum, Ceredigion saw prices fall by 8.8 percent, while Kensington and Chelsea dropped by 5.1 percent, reflecting the sharper correction in more expensive markets.
The rental sector’s cooling aligns with survey evidence from RICS, which has pointed to softer tenant demand in recent months. Yet despite the headwinds, landlord sentiment appears to be stabilising. An estimated 200,000 rental properties have left the market over the past year, a shift linked in part to policy uncertainty, but the National Residential Landlord Association reported a rise in confidence in the third quarter. That suggests that while the sector is smaller, those who remain are navigating the landscape with a little more conviction.
