Market predicted to favour first-time buyers as wage growth outpaces prices and lending rules ease
New seller asking prices are expected to increase by around 2% in 2026, following an estimated 0.6% decline in 2025, as improving affordability and a wider choice of stock help support activity across the housing market.
The outlook draws on a predictive pricing model based on millions of supply, demand and pricing data points, covering more than 90% of the UK market, alongside input from a panel of property experts at Rightmove.
Based on data from the property listing platform, 2025 was “a tale of two halves”, with a firmer first half and weaker conditions later in the year as Budget uncertainty weighed on sentiment.
Market conditions in 2026 are expected to resemble the second half of 2025 in tone, but with improved affordability and healthy levels of stock supporting a gradual uplift in buyer demand.
Regional picture and property types
The report underlines that Great Britain is made up of many hyper-local markets, each influenced by affordability, supply–demand balance and government policy.
While overall price growth is expected to remain modest, markets in Wales, Scotland and northern England are forecast to outpace London and the south of England. Lower entry prices and a more balanced relationship between supply and demand are seen as key drivers of this divergence.
The forecast also points to a multi-layered market, in which the type and specification of a property are likely to be important in determining price trajectories in 2026. In 2025, larger homes – especially detached houses – recorded stronger price performance, while smaller properties, particularly flats, saw slower growth.
Boxing Day bounce and post-Budget demand
A traditional Boxing Day and new year uptick in activity is expected to play an important role as 2026 begins.
Portal data typically show a clear rise in searches and new listings from Boxing Day onwards, as would-be movers begin their plans once Christmas is over. This regular seasonal pattern is expected to be reinforced this time by households that delayed decisions in recent months because of Budget uncertainty.
A survey of more than 10,000 potential movers found that one in five respondents had postponed moving plans until the Budget outcome was known. Many of these “Budget-pausers” who are in a position to proceed are expected to come back to market over the festive period and early January, contributing to an early-year bounce in activity.
First-time buyers as relative beneficiaries
The forecast suggests that some first-time buyers could be comparatively well placed in the 2026 market.
Average wage growth is expected to outstrip house price growth, improving standard affordability metrics, while changes to loan-to-income limits and stress rate requirements may enable a number of buyers to borrow more. A high volume of homes for sale is also set to sustain buyer-favourable conditions, potentially giving first-time purchasers more room to negotiate.
Although rents remain at record highs, the pace of annual rent increases has been slowing, offering some assistance to would-be first-time buyers saving for deposits. For those able to assemble the required deposit, mortgage payments could undercut rents, particularly if landlords pass on the Budget’s 2% increase in property taxes to tenants.
However, existing challenges are expected to remain. Many first-time buyers are still likely to rely on family support for deposits, and those in the south of England continue to face higher stamp duty bills. Mortgage rates, while easing from recent peaks, remain elevated compared with the period prior to 2022.
Mansion Tax weighs on top-end market
At the upper end of the market, the new “Mansion Tax” announced in the November Budget is expected to present headwinds.
From April 2028, owners of homes valued at £2 million or more will pay an annual charge starting at £2,500, rising to £7,500 for properties valued at £5 million or above. Because the levy recurs annually rather than being paid on a one-off basis, it is expected to have longer-term implications for both current owners and prospective buyers, with potential for subdued and more volatile conditions at the top of the market in 2026.
Rightmove’s data indicate that this segment of the market is small, with around 1% of homes currently priced above £2 million and less than 0.5% of sales taking place in this band. Even so, some sellers may respond by reducing asking prices to move below the £2 million threshold, or to offset the cost of the future annual charge for buyers.
Expert views
“2026 will be a mix of some key property market themes continuing, and other new trends emerging,” said Colleen Babcock (pictured right), property expert at Rightmove.
“We expect many of those who put their moving plans on hold over the last few months will pick them back up again from Boxing Day and into the new year, now the Budget is out the way.
“The market conditions next year will favour typical first-time buyers over those at the top-end of the market.”
For Mary-Lou Press, president at NAEA Propertymark, it’s positive to see analysis pointing to a housing market that is slowly regaining its footing rather than racing ahead.
“A forecast 2% rise in prices reflects improving affordability after a subdued 2025, but also highlights how sensitive the market remains to mortgage rates and policy changes,” she said.
“2026 appears set to be a year of cautious confidence, with realistic pricing and local market knowledge from reputable property professionals key to success.”
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