The UK housing market should see price growth of between 2% and 4% in 2026, Nationwide has predicted, supported by easing affordability constraints and a gradual improvement in buyer sentiment.
The lender said it expects housing market activity to strengthen modestly in the coming year as earnings growth continues to outpace house price inflation, and mortgage rates edge lower.
This follows what was described as a “resilient” 2025, where house prices remained close to their all-time highs despite subdued consumer sentiment and elevated interest rates. Annual price growth slowed from 4.7% at the end of 2024 to 2.1% in the middle of 2025 and then to 1.8% last month.
Robert Gardner, chief economist at Nationwide, said: “Looking ahead, we expect housing market activity to strengthen a little further as affordability improves gradually (as it has been in recent quarters) via income growth outpacing house price growth and a further modest decline in interest rates.”
Affordability improved over the course of 2025, Gardner noted, with first-time buyers benefiting from increased credit availability and the highest share of high loan-to-value lending in over a decade.
Nationwide also said that recent tax changes announced in the Budget are not expected to have a major influence on the market in 2026.
The planned council tax surcharge on high-value properties will not come into force until 2028 and will affect a small proportion of homes.
However, the increase in taxes on income from rental properties may continue to dampen buy-to-let activity, potentially limiting the supply of new rental stock.
Gardner said this “could in turn maintain some upward pressure on private rental growth.”