2026 Housing Market: What the Budget Means for Homebuyers & Sellers
It’s been a week since Rachel Reeves’ Autumn Budget. And, as well as breaking out the Christmas decorations and cracking open the Baileys, we’ve done lots of reading and listening to top economists and leading figures in residential property. Having digested what they’ve said, below is our take on how the Budget is likely to shape the residential property market in 2026 and the implications for you if you plan to buy or sell...
Housing Headlines
While news headlines have naturally focused on tax rises and a new “mansion tax”, the underlying data tells a more nuanced story: no boom, no crash, but a quietly shifting market that will reward the best-prepared buyers and sellers.
Here is a rundown of the Budget measures having an impact on home buyers and sellers:
A new “mansion tax” style surcharge on homes over £2m: To be applied via council tax from 2028. This will impact c.150,000–300,000 homes, largely in London and the South East
No reform to stamp duty – yet. SDLT bands remain unchanged, which continues to nudge more buyers into higher tax brackets as prices creep up
An overall tax take rising to a record share of GDP by 2030: According to the OBR, this trend will likely “put the squeeze” on households over the medium term.
In the here and now, the market is ticking along with modest price growth. Nationwide and Zoopla both show annual house price inflation of around 1–2% going into winter 2025. But what comes next in 2026?
6 Housing Market Predictions for 2026
1. Activity picks up as Budget inertia fades
The drawn-out wait for the Autmn Budget inevitably impacted upon market activity, with asking prices slipping in November as buyers and sellers sat on their hands. Clarity on tax changes should now mean those who paused decisions will re-enter the market with more confidence.
This should result in a gradual rebound in agreed sales and new listings through the first half of 2026.
2. Prices: low growth nationally, patchier in South
Zoopla’s latest House Price Index shows UK prices up around 1–2% over the last year, with the first small falls in parts of southern England as affordability caps bite. Experts have reacted by trimming 2026 forecasts to an average figure of around 2% growth.
So, put simply: expect small, incremental growth rather than a surge:
UK-wide: house price growth in the 1–3% range for 2026
London & parts of the South East (including Surrey/Berkshire commuter spots like Camberley): more subdued and variable, with well-priced homes selling and anything over-ambitious sticking.
For sellers, this means the “let’s try 10% over and see what happens” approach is risky. Meanwhile for buyers, small price rises plus slightly lower mortgage rates should improve affordability at the margins – but not transform it.
3. High-end “mansion tax” homes will see more tactical moves
The new so-called “mansion tax” won’t kick in until 2028. Moreover, and as earlier alluded to, its impact will largely be felt by a concentrated band of homes over £2m - around 1% of UK homes – mostly in London and prime commuter belt areas. With that said, the knock-on effects could be seen in 2026 in the form of:
Some owners deciding to bring forward sales or downsizing plans to ahead of 2028
Buyers in that bracket ‘pricing in’ the future annual cost, potentially making them more selective and value-conscious when offering.
4. Mortgage rates ease gently, but affordability stays tight
Forecasts this year consistently predicted that asking prices should edge up as mortgage rates fall. And – whisper it quietly – but there are signs of encouragement on this front as sentiment improves thanks to a modest improvement in affordability as wages outpace price growth. Should this continue, for 2026 we'll likely see:
Incrementally cheaper fixed-rate mortgage deals (based on working assumption that the Bank of England delivers one or two small base-rate cuts)
Lenders remaining cautious, especially with higher-LTV or complex cases.
So, while monthly payments should become slightly more manageable, affordability will keep a lid on any rapid price growth, particularly for first-time buyers and up-sizers.
5. More regional divergence – and premium on ‘best in class’ homes
It is interesting to note the divergence away from London and the South East, with more affordable regions performing better due to the greater value on offer. For 2026, we should expect:
Stronger £ for £ performance in good-value regional cities and well-connected towns, where incomes and house prices are better aligned
In higher-value areas, a sharper split between ‘best in class’ homes (selling) and compromised homes (lingering for longer).
What this means is that presentation, pricing and positioning matter more than ever – buyers will still pay a good price, but only when they feel a home is the right one, not just the next one.
6. Sellers will need to be more strategic – and more realistic
Having looked over Rightmove’s latest index, what’s striking is how quickly asking prices adjust when confidence wobbles – November’s 1.8% fall in new seller asking prices came largely from owners who had over-pitched in the first place. Looking ahead, this is a lesson to learn against a backdrop of modest price growth, higher overall taxes from the Budget and cautious buyers.
Sellers best-placed to succeed next year will be those who:
Price in line with the latest local evidence
Invest in strong marketing (professional photography, video, floorplans, presentation)
Work with an agent who will negotiate carefully rather than simply chase the first offer.
A Last Word
The truth is the November Budget hasn’t had a transformative impact on the housing market, although I’m not sure anyone expected it to. Instead, it has nudged us further into a new phase: slower, more regulated, more sensitive to tax and interest rate changes – but still fundamentally underpinned by demand for good homes in good areas.
For homeowners, 2026 is likely to be a year of steady if unspectacular progress rather than a surge. For buyers, it should bring a little more choice and greater negotiating power – but not bargain-basement prices.
If you’re thinking about a move in 2026, plan early, get clear advice on your options, and build your decisions around real-time local data, not just the national headlines!
And if you’d like a view on how these changes might affect your home, I’m always happy to talk it through.
Reference sources: Office for Budget Responsibility, Rightmove, Zoopla, the Financial Times, and The Independent.