Highlights
- Average UK house price of £272,998 could reach £283,918 by end of 2026 with predicted 2-4 per cent increase.
- Bank of England expected to cut interest rates to 3.75 per cent this Thursday, supporting property market growth.
- FCA announces consultation on mortgage rule changes to make home ownership more accessible for diverse income groups.
UK house prices could rise by as much as 4 per cent in 2026, making getting on the property ladder slightly easier as affordability improves, according to forecasts from lender Nationwide.
Robert Gardner, chief economist at the building society, said prices were likely to increase by 2-4 per cent.
"We expect housing market activity to strengthen a little further, as affordability improves gradually via income growth outpacing house price growth and a further modest decline in interest rates," he told The Guardian.
Average UK house prices stood at £272,998 in November, according to Nationwide. A 4 per cent rise next year would take the average to £283,918.
The Bank of England is widely expected to cut interest rates by a quarter of a percentage point to 3.75 per cent on Thursday, continuing the downward trend that has helped support the property market this year.
Mortgage market changes
Separately, the Financial Conduct Authority (FCA) announced plans on Monday to help first-time buyers and self-employed people get on the property ladder.
The City watchdog will consult on changes to the mortgage market, including simplifying mortgage rules to allow more flexible products that better reflect different working patterns and income levels.
The FCA also aims to improve advice to help people "confidently plan for later life", while encouraging the use of AI to help brokers provide "better and faster advice".
Mortgage rates are broadly falling across the market. The average two-year fixed rate was 4.84 per cent, while the average five-year fix was 4.91 per cent on Monday, according to analyst Moneyfacts.
Rising wages and looser affordability tests have enabled first-time buyers to take out larger mortgages than ever before. The average first-time buyer borrowed £210,800 in the year to September, a record high, according to property agent Savills.
Nationwide said the price gap between homes in northern and southern England narrowed to its lowest since 2013, largely because of weak growth in London. The average price of a home in northern England is now almost 58 per cent of that in the south.
