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Britain’s housing market has shown clear signs of recovery since the start of 2026, rebounding from a slowdown seen toward the end of last year ahead of Chancellor Rachel Reeves’ November budget. According to property website Zoopla, buyer activity has picked up notably as confidence returns, supported by easing mortgage rates and improving economic indicators.
Zoopla reported that buyer demand in early 2026 is broadly in line with levels seen at the beginning of 2024. However, demand remains around 9% lower than the surge recorded in early 2025, when many buyers rushed to complete purchases before a temporary property tax break expired. Despite this, the renewed momentum suggests that households who postponed decisions in late 2025 are now re-entering the market.
Richard Donnell, Executive Director at Zoopla, said that after a weak end to 2025, homebuyer confidence is recovering as borrowing costs fall. Average interest rates on five-year fixed-rate mortgages with a 75% loan-to-value ratio have dropped to their lowest level since 2022, improving affordability and encouraging buyers back into the market.
UK house prices have increased by an average of 1.2% over the past 12 months, though Zoopla highlighted significant regional variations. The strongest price growth has been recorded in more affordable areas of the country, reflecting continued demand for lower-cost housing amid ongoing cost-of-living pressures.
Other housing market data points to a broader post-budget recovery. Rightmove reported that asking prices rose by a record amount during the Christmas and New Year period, while the Royal Institution of Chartered Surveyors noted improving market expectations in December. Beyond housing, stronger-than-expected purchasing managers’ surveys for January and official retail sales figures for December suggest economic growth in early 2026 may exceed earlier forecasts.
Although Reeves announced £26 billion in tax rises in her November budget, most measures are set to take effect later, easing near-term pressure on consumers. Combined with falling mortgage rates and improving sentiment, this has helped support a more optimistic outlook for the UK housing market in 2026.
