When the autumn Budget landed on 26 November 2025, a mixture of relief and apprehension rippled through the UK housing market. On one hand, the immediate jolts higher taxes on rental income, a new surcharge for homes over £2 million, and prospective regulation felt like a fresh round of headwinds. On the other, the first post-Budget data suggest a surprising degree of resilience.
Average UK house prices rose by 0.3 per cent in November, nudging the typical home value up to nearly £273,000. That modest uplift came despite concerns that the fiscal shake-up would dampen demand. Meanwhile the annual growth rate remains positive, though more subdued than in past years. Indeed, the pace has slowed compared with mid-2025 when price growth approached 6 per cent year-on-year.
Private rents continue to climb too, albeit more slowly than during the pandemic years. Recent statistics show annual rent inflation running at around 5–7 per cent depending on region, with monthly rents in England now averaging in the low £1,400s. These figures remain well above pre-Covid norms, reflecting persistent pressure on supply and a shortage of options for tenants.
Looking ahead, forecasts from several respected property consultancies paint a cautiously optimistic picture. Rather than expecting a sharp rebound, the consensus is for steady, mid-single-digit gains over the next few years. House price growth of around 3–5 per cent in 2026 is widely anticipated, with some regions particularly in the North, Midlands, and Scotland expected to outperform more traditional southern strongholds. That regional divergence was already prefigured in the latest data, which show more robust price growth outside London and the South East.
A number of structural factors undergird this outlook. First, the supply of new homes remains constrained, a pattern that predates but has been reinforced by rising development costs and regulatory uncertainty. Second, mortgage rates appear to be softening from their post-pandemic highs, improving affordability for buyers who can wait or are prepared to act soon. Third, rent growth continues to outpace wage growth in many areas, maintaining pressure on potential buyers to shift from renting to owning especially in commuter belts or secondary cities where value remains comparatively strong.
At the same time there are legitimate headwinds. Higher taxes on rental income may discourage some landlords from adding or even maintaining stock. For the priciest segment of the market, the new surcharge on homes worth over £2 million which will kick in from 2028 could suppress demand. And economic uncertainty, especially around inflation, interest rates and general consumer sentiment, could still weigh on the market’s upward momentum.
Nevertheless, the overall tone is not one of panic but recalibration. The post-Budget slump many feared has not materialised. Instead what is emerging is a more tempered, measured property market: one where gains are modest, volatility is lower, and long-term structural trends not short-term fiscal drama are likely to shape outcomes.
Over the next 12 to 24 months the housing market may not soar, but it appears positioned to steady itself. As buyers, renters and policymakers settle into this recalibrated landscape, it seems increasingly plausible that what follows the Budget will not be a crisis but a course correction.
