A raft of housing market data came out earlier this week, which suggests that generally, buyers remain cautious about taking advantage of current market conditions. However, there has been both enough pragmatism among sellers and enough resolve among purchasers to keep the prime market ticking over.
Annual house price growth also remains marginally positive, albeit driven by markets further from London.
In the rental market, which has seen its fair share of regulatory change in 2026, annual rental growth stands at 3.7% across the UK as a whole, according to the ONS.
Headline houses prices
According to Nationwide, annual house price growth stood at 1.6% at the end of August. Meanwhile underlying inflation stood at 2.9% in July, according to the ONS.
That means the average UK house price is still gently coming down on an inflation-adjusted basis. And so, while average UK prices have risen by a net figure of around 4% since March 2022, they have fallen by a little over 15% on an inflation-adjusted basis.
Affordability
Consequently, underlying affordability, in terms of house-price-to-income ratios, continues to gradually improve. Evidence from the Regulated Mortgage Survey suggests that the recent, more relaxed approach to the application of mortgage regulation has added to the buying opportunity for those committed to moving.
However, the increase in fixed rate mortgage costs that we saw in mid-July has prevented that from translating into any improvement in activity. Indeed, we saw a third consecutive month of weak mortgage approvals in July, according to the Bank of England. Coming in at a little over 56,000, they remained well below a recent market norm of 66,000.
And real-time data from Twenty CI points to a continuation of subdued market conditions in August. Activity levels for the market as a whole were 6.5% below the same month in 2025.
In the market over £1m they were also down; but by a somewhat lesser 2.5%.
Pre-Budget considerations
This time last year, we had just entered an unprecedented period of tax policy kite flying and press speculation, which impacted activity at the top end of the market from September through to the year-end.
In 2026, John Healey will deliver his Budget a month earlier than Rachel Reeves did in 2025. And Andy Burnham has been quicker to distance himself from a wholesale reform of property tax than his predecessor.
That suggests we will see less disruption this autumn, though with a commitment to increase defence spending adding to the pressures on the public purse, we still expect to see a degree of pre-Budget caution hang over the market.
History tells us there remains every prospect of a short burst of activity immediately before the Budget, driven by those keen to get deals through before any possible tax changes come into effect.
Investors sitting on significant capital gains may, in particular, look to get a wriggle on. The Renters’ Rights Act is likely to limit a spike in sales, but we expect to see a heightened sense of urgency from those with vacant properties, particularly those who are either already actively marketing them for sale or are weighing up their options.
My top picks
Prime housing markets remain price sensitive as caution returns
Prime housing markets tend to like certainty – but so far in 2026, this has been in short supply.
Prime residential rents – Q2 2026
Our latest research explores what's driving rental growth across the UK's prime markets, while our recent survey reveals how landlords are responding to the changing regulatory landscape.