Buyer confidence is returning to the UK housing market at the start of 2026 as mortgage rates ease and competition between lenders intensifies. However a sharp rise in homes for sale is reshaping market dynamics, Zoopla’s latest House Price Index reveals.
Buyer demand has rebounded since the turn of the year following a subdued end to 2025, when many households delayed moving decisions amid uncertainty around the autumn Budget.
Activity levels are now broadly in line with early 2024, although still around 9% lower, and remain below the unusually strong start to 2025 when buyers rushed to complete purchases ahead of stamp duty changes.
Improved affordability is supporting demand. The average 5-year fixed mortgage rate at 75% loan-to-value has fallen to around 4%, its lowest level since 2022, helping more households consider moving.
MORE CHOICE
However, buyers are entering a market with far more choice than a year ago. The total number of homes for sale is 6% higher year on year, with agents marketing the largest stock of properties seen in eight years.
The increase in supply is easing competition between buyers and placing greater emphasis on realistic pricing and presentation from sellers.
REGIONAL DIFFERENCES
House price trends continue to diverge regionally. The average UK house price rose by 1.2% over the past 12 months, increasing by around £3,200 to £269,800 by the end of 2025.
Prices are rising up to four times faster in more affordable parts of the Midlands, northern England, Scotland and Northern Ireland. By contrast, small price falls of around -0.1% have been recorded across the South East and South West.
In southern England, higher purchase costs and a greater supply of homes are making buyers more price-sensitive. London has significantly more homes for sale than a year ago, reinforcing a buyers’ market in the capital and contributing to price declines through 2025.
COMPETITIVE CONDITIONS
Zoopla said the increase in supply is drawing more buyers back into the market, underlining the underlying desire to move, but warned sellers that conditions are more competitive and local market factors now matter more.
Richard Donnell (main picture, inset), executive director at Zoopla, said: “After a weak end to 2025, home buyer confidence is returning as mortgage rates ease and those who delayed decisions last year return to the market.
“The first few weeks have seen buyer demand fall short of the very strong start to 2025 when buyers were rushing to beat the stamp duty deadline.”
MORE HOMES FOR SALE
He added: “Market conditions vary across the country and are defined by the level of choice for home buyers.
“There are more homes for sale and more choice is welcome news for buyers, but sellers need to adapt to a more competitive market where pricing and presentation really matter for serious sellers looking to move in 2026.”
