Asking prices for newly listed homes were effectively flat in February, edging down by £12 to £368,019, as the market took stock following January’s unusually strong start to the year.

The subdued monthly movement contrasts with the typical 0.8% rise seen in February over the past decade.

However, January’s surge means prices remain 2.8% higher than in December, marking the strongest opening to a year since 2020.

The early momentum was driven by renewed confidence after the uncertainty surrounding the late Autumn Budget subsided.

FRONT-LOADED GROWTH

Sellers who had delayed listing returned to the market in force, front-loading price growth into January. By February, however, the weight of supply and more measured demand tempered further increases.

The number of homes for sale is at its highest level for this time of year in more than a decade, intensifying competition among sellers.

Buying activity, while steady, is softer than at the same point in 2025, when purchasers were racing to complete ahead of stamp duty changes in England.

Affordability dynamics are also shifting. Average asking prices are broadly unchanged year-on-year, while average earnings have risen by 4.7% over the same period.

Mortgage rates remain well below their post-mini-Budget peak, with the average two-year fixed rate at 4.28%, compared with 4.96% a year earlier.

“The market fundamentals haven’t changed.”

Colleen Babcock (main picture, inset) property expert at Rightmove, said: “Virtually flat prices in February really needs to be viewed alongside what happened in January.

“After the prolonged uncertainty in the run up to the late November Budget, plus the usual Christmas slowdown, we saw activity pick up again from Boxing Day.

“Many sellers, some of whom had been holding back because of the Budget, came to market in early 2026 with renewed confidence, which helped to drive that bumper January price rise.

“But the market fundamentals haven’t changed. There are still lots of homes for sale, and buying activity isn’t as strong as this time last year, when many buyers were rushing to move before the stamp duty increase in England.

“So in February, sellers have taken a more cautious approach by holding onto January’s gains rather than pushing prices higher, at a time when competition is high and the market is still very price-sensitive.”

GOOD TIME TO BUY

She added: “2026 is shaping up to be a good year to buy. Over the last three years average wages are up by around 17%, significantly outstripping property prices which are up by just 1.5% over the same period.

“A more favourable mortgage rate and lending environment are both also helping to improve buyer affordability.”

FIRST-TIME BUYER HELP

Matt Smith, Rightmove’s mortgage expert, said: “Last year’s review of the Loan-to-Income cap and reminder to lenders about stress testing flexibility by the FCA have had the intended positive outcome of enabling the typical buyer to borrow more.

“On top of this, there continues to be a strong focus from lenders on helping first-time buyers, with many lenders creating new products to help eligible buyers to borrow larger sums. This is a big contributor to improving affordability as both first-time buyers and home-movers are better equipped to borrow what they need and can afford to repay.”

SLUGGISH ECONOMY

Tom Bill, head of UK residential research at Knight Frank, added: “Plans put on hold by the Budget were activated either side of Christmas, which produced positive demand signals in January.

“However, buyers and sellers are operating against the backdrop of a Prime Minister on borrowed time and a sluggish economy.

“A leadership challenge may derail sentiment in the short term but demand in the longer-term will be shaped by the economic policy platform of any new Prime Minister and whether falling inflation can push down mortgage rates.”

BUOYANT MOOD

Tomer Aboody, director of specialist lender MT Finance, said: “More stock coming to the market is inevitably keeping prices in check but nevertheless the mood in the housing market is more buoyant at the start of this year than the end of last with increased activity from buyers and sellers.

“With the prospect of further rate reductions, we are hoping to see increased activity in the form of more transactions as the year pans out.

“Lower mortgage rates will help but may not be enough on their own – encouragement from the government in the form of another stamp duty concession or some form of assistance for first-time buyers may be required to boost activity in a meaningful way.”

POSITIVE SIGNS

Louise Apollonio, sales and distribution director for retail mortgages at Shawbrook, said: “Following January’s robust activity, house prices have held in February as buyers have now eased into the new year, taking advantage of the number of properties available on the market to explore their options.

“Though subdued, continued activity could be a positive sign ahead of the Spring Statement, signifying growing consumer confidence, which is certainly what buyers and sellers need.

“It will be up to the Chancellor to bolster the market by addressing the next steps, as well as providing further support to get first-time buyers on the property ladder.

“With high-street lenders now introducing new products to ease affordability, and specialist lenders continuing to support non-traditional buyers, there is a new sense of hope which can be amplified by Government intervention.”

RENEWED CONFIDENCE

Hamza Behzad, business development director at Finova, said: “Following last month’s record-breaking figures with the biggest monthly jump since June 2015, today’s data suggests that early-year momentum is being sustained rather than fading.

“It’s still an encouraging start to the year, with sellers showing renewed confidence after several months of muted price growth.

“For buyers, affordability remains the defining theme. While mortgage rates are still higher than the ultra-low levels seen in previous years, gradual improvements in borrowing costs and potential interest rate cuts in the spring are rebuilding confidence. Buyers are returning, but they are more selective, even with pricing stabilising around the mid-4% range.

“Regulatory changes, including the Renters’ Rights Bill, will reshape parts of the lending and rental markets, but they won’t determine the direction of house prices just yet. The real driver is likely to be confidence – shifts in sentiment and investor appetite are far more likely than a sudden or dramatic price correction.”