Source: Sharecast
The lender said it expected housing market activity to strengthen “a little further” as income growth outpaces house price growth and amid a “modest decline in interest rates”.
“The changes to property taxes announced in the Budget are unlikely to have a significant impact on the market. The high value council tax surcharge is not being introduced until April 2028 and will apply to less than 1% of properties in England and around 3% in London,” said Nationwide’s chief economist Robert Gardner in an outlook for 2026.
“The increase in taxes on income from properties may dampen buy-to-let activity further and hold down the supply of new rental properties coming onto the market, which could in turn maintain some upward pressure on private rental growth.”
Rival lender Halifax forecast a slightly lower range of between 1% and 3%, with its head of mortgages Amanda Bryden agreeing that affordability was improving.
“While affordability remains challenging, the picture has improved compared to recent years, driven by a combination of above-inflation wage growth, lower interest rates and some expansion of eligibility criteria from mortgage lenders," she said.
“For those taking their first steps onto the property ladder, monthly mortgage costs as a share of income are now at their lowest level since 2022, with the rate on a typical two-year first-time buyer mortgage (90% LTV) dropping by roughly 0.8 percentage points over the last year."
“Looking ahead to 2026, we expect house prices to rise modestly, by somewhere between 1% to 3%. While wage growth is expected to slow and unemployment may edge higher, lower interest rates and easing inflation should help to gradually improve homebuyers’ purchasing power."
Reporting by Frank Prenesti for Sharecast.com
