Housing market recovery to be slow and gradual, agents tell Bank of England

The housing market has begun 2026 on a subdued footing, with estate agents telling the Bank of England that there is little sign so far of stronger demand or higher transaction volumes.

The Bank’s latest summary of business conditions described sentiment as slightly firmer than late last year, but noted that overall activity remains weak and any recovery is likely to be gradual.

According to the report, market conditions continue to lean in favour of purchasers, with the supply of homes expected to outstrip demand in the near term. This imbalance is especially evident in areas where vendors must adjust expectations on price or timescales in order to secure a sale, reinforcing a negotiating advantage for buyers.

The Bank highlighted Central London as the weakest part of the market. High‑end values in the capital fell sharply over the course of last year and are still under pressure, and agents there report particularly low levels of activity.

By contrast, most regions outside London are projecting broadly flat prices or only modest gains, suggesting a more stable but still cautious environment.

In the lettings sector, the Bank noted that growth in rents was easing from recent peaks. However, it also warned that some landlords are leaving the market ahead of planned reforms to renters’ rights in England, which could restrict available stock and intensify affordability challenges for tenants.

For mortgage professionals, the picture points to a market where purchase volumes may remain constrained even as confidence edges up, with regional divergence and the evolving regulatory backdrop in buy‑to‑let likely to shape lending strategies through the early part of 2026.