Real estate market map in the United Kingdom: price rebound expected by early 2026

The landscape of the UK real estate market shows changing dynamics at the beginning of 2026. According to the Nationwide report, the average house price in the UK increased by 0.3% in January, reaching £270,873 (approximately $370,600). Data from Jin10 indicates that this growth coincided with market analysts’ expectations and marked a significant rebound after declines observed at the end of the previous year.

Return to Growth After Political Uncertainty

The price increase represents a notable correction following a wave of negative sentiment triggered by the Labour Party government’s tax hikes. On an annual basis, property prices rose by 1% compared to the same period last year, indicating gradual market stabilization. This trajectory suggests that the budget-related uncertainty, which previously hampered buyer activity, is gradually losing influence. However, this positive change is limited in scope relative to broader economic challenges.

Threats to Mortgage Market Outlook

Despite encouraging data from January, economists remain cautious about future growth prospects. Rising unemployment combined with persistently high mortgage rates pose significant barriers to further market expansion. Particularly concerning are the mortgage approval figures from December, which fell to the lowest level in the past 18 months. These signals suggest that despite the visible rebound in prices, buyers’ ability to finance transactions remains constrained, creating a complex landscape of forces affecting the UK real estate market.