UK Housing Market Update – January 2026 Outlook
January has once again demonstrated the underlying resilience of the housing market following a period of modest but steady growth through 2025.
Much of this growth was concentrated in the second half of 2025, driven by a gradual easing of mortgage rates, continued wage growth, and improving buyer confidence. Together, these factors helped stabilise affordability and encouraged both first-time buyers and movers back into the market.
The reduction in mortgage rates during late 2025, with some products falling to their lowest levels in over 18 months, has been a key factor in reviving buyer interest. This has resulted in a noticeable increase in new buyer registrations, viewings booked, and sales agreed when compared with the same period in January 2025.
Mortgage approvals have remained at healthy levels into early 2026, broadly in line with, and in some cases exceeding, long-term averages. This suggests a market that is no longer in recovery mode but has instead moved into a more stable, sustainable phase.
Looking Ahead to 2026
Looking forward, we anticipate modest house price growth during 2026, likely in the region of 2–4%, depending on location and property type. This outlook is supported by expectations that mortgage rates will continue to ease gradually over the course of the year, alongside continued income growth and a persistent imbalance between supply and demand in many local markets.
The stamp duty changes introduced in April 2025 did influence buyer behaviour last year, particularly among first-time buyers, many of whom brought forward their purchases to take advantage of lower thresholds. As a result, early 2026 activity is expected to be more measured, but nonetheless stable.
West Midlands Market Overview (January 2026)
As of late January 2026, the West Midlands housing market continues to show encouraging trends in both pricing and transaction levels.
Property Prices
- The average property price in the West Midlands is now approximately £285,000–£290,000, representing steady annual growth.
- Detached properties continue to command the strongest values, followed by semi-detached, terraced houses, and apartments, with family homes remaining in highest demand.
Market Dynamics
- While the urgency created by stamp duty deadlines has now passed, buyer confidence has improved compared to early 2025.
- Realistic pricing and well-presented homes are continuing to attract strong interest and achieve agreed sales.
Buyer Activity
- First-time buyers remain active, often supported by family assistance.
- Home movers are returning to the market with greater confidence as borrowing costs stabilise.
Rental Market
The rental sector remains under significant pressure, with demand continuing to outstrip supply across much of the region. Landlords are facing ongoing challenges including higher borrowing costs, increased compliance requirements, and regulatory changes, which has led some to exit the sector. This has contributed to continued upward pressure on rents.
Mortgage Rates and Affordability
Mortgage rates through early 2026 remain higher than the historic lows seen earlier in the decade but are expected to trend downward gradually. Rates are likely to average just under or around 5% for much of 2026, which, combined with wage growth, should slowly improve affordability for many buyers.
General Market Forecasts
- Existing home sales are expected to increase modestly during 2026 as confidence improves.
- New-build activity is forecast to rise slightly, supported by incentives from developers and improved lending conditions.
Conclusion
In summary, the 2026 housing market is expected to be characterised by steady, sustainable growth rather than rapid price inflation. Buyers and sellers alike should take confidence from improving stability but remain mindful of pricing, affordability, and local market conditions.
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Thank you for reading our latest article, your interest in Acres, and our property for sale.
Nigel & Jayne Deekes – Acres Partners
