The UK housing market remains resilient at the start of 2026, even if performance varies sharply by region. Official data from the Office for National Statistics shows that average UK house prices rose by 2.4% in the 12 months to December 2025, with the typical property valued around £270,000, despite a slight monthly dip.
That headline figure masks a two-speed market. In England, prices rose by 1.7% annually, while Wales and Scotland saw stronger momentum at around 5% and 4.9% respectively. The North East was among the fastest-growing English regions, with annual increases near 4.6%. By contrast, London was the only major region to record an annual price decline, with values down around 1%.
This divergence reflects deeper affordability and demand dynamics. High prices, particularly in the capital, remain a barrier for many buyers, while regions with more accessible pricing continue to attract both first-time and later-stage purchasers. Rental markets, too, are showing signs of easing, with average private rents rising 3.5% year-on-year, the slowest pace since 2022.
London’s slower price performance has been widely documented, with inner-city flats particularly affected by changing preferences for space and remote work. Recent analysis found that UK flat prices declined sharply in late 2025, emphasising uneven strength across housing segments.
For investors, this distribution highlights the importance of regional strategy. Where London once dominated narratives of growth, broader UK markets are now showing competitive performance and, in some cases, superior price momentum. Regions such as the North East and Scotland are not only more affordable but are also benefiting from stronger effective demand, supported by employment patterns and migration trends.
Looking ahead, modest forecasts from lenders and analysts suggest house prices could grow further in 2026, albeit at a moderate pace. Nationwide has projected 2–4% growth in the year ahead, reflecting easing rates and improved affordability relative to recent years.
This environment points to a housing market that is fundamentally steady but nuanced. Average national growth masks significant regional variation. For investors, a diversified approach that recognises differential performance across the UK could deliver stronger risk-adjusted returns than a singular focus on capital-centric property.
