UK house prices are recovering modestly following the correction of 2023. The direction is upward, but affordability constraints mean the pace is restrained.
The Current Market
The average UK house price is approximately 292,000 pounds, up from a post-correction low of 278,000 in early 2024. London prices average 529,000 pounds.
What Is Driving Prices
Falling mortgage rates are the primary engine. As the Bank of England cuts the base rate, mortgage affordability improves and demand picks up.
Underlying demand fundamentals remain strong: population growth, household formation, and continued under-supply in high-demand areas.
What Is Restraining Prices
Affordability remains stretched by historical standards. Even with rates at 4.5%, the typical first-time buyer mortgage payment as a share of income is above the long-run average in most regions.
Stamp duty reversion in April 2025 removed a demand stimulus.
Regional Picture
London and the South East continue to underperform relative to other regions. The Midlands and some Northern cities are showing stronger price growth as remote working supports demand outside expensive urban centres.
Forecasts
Most forecasters project 3-5% house price growth nationally in 2026. The range of credible outcomes is wide, with rate uncertainty the main variable.
