First-Time Buyers to Lead UK Housing Market in 2026

Published: 31 December 2025. The English Chronicle Desk. The English Chronicle Online.

First-time buyers are set to dominate the UK housing market in 2026, with first-time buyers expected to boost sales as interest rates fall. Analysts predict that rising affordability will empower new entrants, making first-time buyers the primary force in housing transactions. Mortgage costs, as a share of income, have eased to levels unseen since 2022, giving first-time buyers renewed purchasing power amid a gradually recovering economy. Nationwide and Halifax report that monthly payments for new buyers remain lower than expected, providing additional opportunities for first-time buyers across the country.

The for-sale housing market is projected to grow moderately next year, with prices forecast to rise between 2% and 4%, while rental inflation is likely to slow compared to recent rapid increases. After the stamp duty tax break expired in March 2025, the market faced uncertainty from trade and budget speculation, leaving house prices climbing just 1.8% in the year to November. The average home now costs £272,998, according to Nationwide building society, with growth below the 3.2% inflation rate, which technically makes housing slightly more affordable in real terms.

Marcus Dixon of JLL highlighted that the second half of 2025 experienced stagnation, driven by budget uncertainties. He noted that this moderation in prices could ultimately benefit new buyers, as real-term costs remain contained. The Bank of England has recently cut interest rates to the lowest level in nearly three years, a move expected to be followed by two further reductions in 2026. Lenders such as Santander have already introduced fixed-rate mortgages below 4%, with two-year deals as low as 3.55% for those able to place a 40% deposit.

Predictions for house price growth remain modest, concentrating on 2% to 4% next year, followed by 4% in 2027 and potential rises of 5.5% by 2028. This aligns with projections from Nationwide, Halifax, Savills, JLL, Knight Frank, Hamptons, and property platforms like Rightmove and Zoopla. London, however, continues to see stagnant prices, while northern England benefits from steady growth, narrowing the long-standing north-south divide.

Mortgage regulations have also been relaxed, enabling larger loans with smaller deposits and easing affordability stress tests. The City watchdog has introduced initiatives to help both first-time buyers and self-employed individuals access the market. Savills’ Emily Williams emphasized that reduced deposit requirements, sometimes as low as 10% to 15%, significantly shorten the time needed to save, particularly in London and the south-east.

Robert Gardner, Nationwide’s chief economist, said that the mortgage payment share for first-time buyers with a 20% deposit has dropped to 33% of income, down from over 38% in 2023, moving closer to the long-term average of 30%. Hamptons reported that first-time buyers accounted for a third of all purchases in 2025, reaching a record share of half of London’s market. Beveridge, Hamptons’ head of research, stated that first-time buyers are now a decisive factor, partly because existing homeowners are reluctant to move due to high stamp duty.

Additionally, changes to the Renters’ Rights Act encouraged some landlords to sell, resulting in smaller, more affordable properties frequently purchased by first-time buyers. The high-value council tax surcharge, also referred to as the “mansion tax,” affects homes above £2m from April 2028, but its impact has been less significant than anticipated. The central London market saw its busiest November in 17 months, according to JLL, yet overall sales remain slow, with homes taking over 200 days to sell on average. Rising unemployment to 5.1% and broader economic uncertainty continue to temper confidence.

Rental market growth is expected to ease, with average increases of 2% to 3.5% in 2026, down from 5% to £1,360 per month in October. Despite this moderation, ongoing demand and limited new rental supply mean rents are unlikely to fall dramatically, maintaining steady growth through the year. Overall, first-time buyers are poised to shape the market in 2026, benefiting from lower borrowing costs, improved affordability, and regulatory support.

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