UK house prices will grow moderately, rising by 2.5% in the fourth quarter of 2026, as inflation cools and interest rates ease, according to the latest Hamptons housing market forecast.
Transaction volume is expected to stabilize at 1.15 million transactions in 2026, with affordability improvements offsetting economic and tax headwinds.
Political risk and higher borrowing costs will weigh on price growth starting in 2027, with growth slowing to 2% in the fourth quarter of 2027 and 1.5% in the fourth quarter of 2028.
Hampton expects major markets to remain subdued, with tax policy and uncertainty stifling liquidity and recovery.
The report also states that the East Midlands will see greater price growth than London next year, with the North West and West Midlands not far behind until the end of 2027, marking a significant change in the region’s house price cycle since house prices bottomed out in 2009.
Commenting on the latest forecasts, Aneisha Beveridge, head of research at Hamptons, said: “The housing market has been mirroring the mood of the country. While the headlines have been filled with uncertainty, underneath it all we are seeing signs of resilience. Inflation is easing, mortgage rates are falling and affordability is improving, which should support modest house price growth next year.”
But she said it was hard to ignore the growing drag of taxes and politics. “London has historically led the economic recovery but is now being held back by higher stamp duty and wider tax concerns, locking some owners into their homes and preventing others from buying. The next stage of the cycle will be driven less by discretionary moves and more by pragmatism – with policy playing an increasingly important role in deciding who, when and where to move. At the same time, the balance of power is shifting: since 2008 Prices in the Midlands are expected to rise more than in London since prices bottomed out following the financial crisis.”
Beveridge added that following the Autumn Budget, Hampton updated its housing market outlook to reflect the latest economic and policy changes.
“While the Budget brings clarity to the mainstream market, the lack of demand-side stimulus such as Help to Buy or stamp duty cuts means the market will remain cautious. The Budget introduces targeted measures, including a council tax surcharge on homes over £2m and an increase in property income tax for landlords, which only impact a small part of the market.”
