Property, Politics and Economics in 2026

If you just want a quick guide to what’s likely to happen in the property world in 2026, then this article is for you!

These summary forecasts are from:

Agents: Savills, Hamptons, Knight Frank, Chestertons
Lenders: Nationwide and Halifax
Portals: Zoopla and Rightmove

And some special statistics appearances from IMLA, Capital Economics and Oxford Economics.

In a nutshell, it’s expected to be pretty similar to 2025:

Transactions

These should always be considered first as they influence what happens to property prices.

Buying and selling transactions are likely to be around the same or slightly higher than they were in 2025, reaching anything from 1,150,000 sales to 1,118,000, or my prediction of 1,200,000 which is the average we sell, going back as far as 2000.

Property Prices

I think it’s really difficult to generalise about property prices in today’s market, and that’s because property prices are incredibly individual to a road and the local supply and demand, which varies hugely month to month.

However, here are the ‘generic’ averages forecast and the reason this is useful is this is what the media will be telling average buyers and sellers and so it will have some impact on the market confidence:-

Estimated to rise between 2% and 4% versus 2025.

Do bear in mind though that many areas ‘down south’ still haven’t recovered their average prices to 2022 levels – before Bank Base Rates (BBR) accelerated and increased further than they would have done when Liz Truss’s disastrous budget hit.

Regionally, Hamptons and Savills suggest that there will be little growth in property prices in London while Yorkshire and Humber are expected to top the growth charts with 3.5% to 4% rises expected.

Property Rental Prices

Forecasting rents for 2026 is trickier, largely due to the implementation of the Renters’ Rights Act (RRA).

What may happen in practice…

In theory, landlords may choose to increase rents before May 1st 2026, especially where rents are not currently close to market value.

This is most likely where:

• A tenant has been in situ for several years

• Rents haven’t been increased for around four years

In these cases, rents may be 17–25% behind the market, according to the government’s ONS statistics.

Under the Renters’ Rights Act, landlords can only increase rents once a year, so a catch-up rise of this scale is unlikely to be achievable after May 1st 2026.

Impact of banning rental bidding

Also bear in mind:

• Tenants will no longer be able to offer rents above the advertised price

This could have a double effect:

• Holding rental growth back over time

• Encouraging higher advertised rents than would have been set under the ‘old’ system

The wage growth constraint

Wage growth is usually the best natural cap on rental inflation.

With wage growth expected to fall to +3.9% in 2026, forecasting rent levels becomes even more challenging.

My view on rents in 2026

For me, we are likely to see above-normal rent rises before May 1st, followed by more subdued rental inflation later in the year — even if demand continues to exceed supply

This reinforces why average rent rise forecasts are pretty useless. They typically compare rents in 2026 with 2025, but:

• Ignore potential front-loaded increases early in the year

• Ignore the likelihood of weaker growth in the second half

And it’s really important landlords understand that increasing rents post May 1st 2026 will be difficult and restricted.

Economic and financial forecasts driving the property market
The other driver behind transactions and ultimately property prices is what’s likely to happen to inflation and how this will influence wages and the Bank Base Rate.

One of the best forecasters I’ve found for these measures is Capital Economics.

Inflation

They forecast that inflation will finally fall to the 2% target the Bank of England has set. However, inflation has been super sticky, and this may depend on what happens between Ukraine and Russia, which was a big driver of inflation increases a few years ago.

Source: https://www.capitaleconomics.com/publications/uk-economics-weekly/2026-key-themes-and-possible-surprises#

Wages

With a slowing economy and a rise in unemployment to just over 5%, this does have the advantage (for businesses at least) of seeing wage inflation slow bar those on minimum wage.

As such, wage growth for those on minimum levels will rise as follows:-

Key 2026 Wage Rates (Effective April 1, 2026)

Ages 21+ (National Living Wage): £12.71 (a 4.1% increase).
Ages 18-20: £10.85 (an 8.5% increase).
Ages 16-17: £8.00 (a 6% increase).
Apprentices (under 19 or in first year): £8.00 (a 6% increase).

In comparison, general wages are expected to rise less at 3.9% in 2026

Source: Savills Research, Oxford Economics: https://www.savills.co.uk/insight-and-opinion/research-consultancy/residential-market-forecasts.aspx

Bank Base Rate

If inflation does fall back to it’s 2% target, then they think interest rates (BBR) will fall from the December 2025 3.75% to 3%.

Mortgage Rates

Currently, long term fixed rates aren’t expected to fall that much as the BBR predicted falls are ‘baked in’ to their offers.

According to a report in the Telegraph, Adam French of Moneyfacts expects mortgages to fall to an ‘average’ of 4.3% to 4.5%, meaning that for those with large-ish deposits, there should be some really good deals available below this level.

Source: https://www.telegraph.co.uk/money/property/mortgages/will-mortgage-rates-down-2026-asked-experts/#