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House price growth of 1%-3% seem about right?

ended 08. January 2026

AFFORDABILITY is at its best level in a decade, the Halifax said this morning, while predicting house prices will show modest house price growth of between 1%-3% in 2026. 

The lender revealed that average house prices fell by -0.6% in December, down £1,789 compared to November, with a typical property now costing £297,755, the lowest since June 2025.

On an annual basis, growth slowed to +0.3%, down from +0.6% in November. 

Amanda Bryden, Head of Mortgages, Halifax, said: "While affordability pressures persist, the house price to income ratio was at its lowest in over a decade in December, striking a positive note for those looking to purchase their first home.

"On this basis, and recognising the headwinds that may affect buying power – such as the slowing of wage inflation and flattening employment rates – we expect a modest rise in house prices during the year of between 1% and 3%."

Two Qs (we are writing this story now so hop to it):

  • How important is the house price to income ratio being at its lowest for over a decade in terms of oiling the wheels of the property market in 2026?
  • Do you agree with the Halifax's prediction of 1%-3% average annual house price growth?

8 responses from the Newspage community

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Katy EatentonVerified
Mortgage & Protection Specialist at Eatenton Finance
Affordability is the key to unlocking the property market in 2026. Modest price growth in 2025 helped more people achieve the dream of homeownership and that looks set to continue into 2026. Lenders innovated aggressively last year on the affordability front as they also know that cracking the affordability enigma code is essential to support buyers. The Halifax is correct that slowing wage inflation and rising unemployment will be headwinds but if the economy stabilises and we have another year of modest price growth, many more people will be able to get that important first step on the property ladder.
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David StirlingVerified
Independent Financial Adviser at Mint Wealth
These figures from the Halifax corroborate the figures from Nationwide a few weeks ago, namely that there was a cooling of the property market in the latter stages of 2025, mainly due to uncertainty surrounding changes in the Budget. With lenders relaxing affordability models and starting to innovate more products to help borrowers achieve their desired lending requirements, we should see a much more positive shift in the property market in 2026. Northern Ireland again looks set to lead the way in growth, with Halifax estimating a rise of around 7.5%, which is reflected well in our ratio of house prices to income. 2026 could well be the year that fledgling first-time buyers fly the nest.
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Craig FishVerified
Director at Lodestone Mortgages
The house price-to-income ratio hitting a decade low is significant. It's the green light many first-time buyers have been waiting for. With pent-up demand in the system and mortgage rates continuing to ease, 2026 could finally be the year aspiring homeowners make their move. If you've been sitting on the fence thinking homeownership is out of reach, now's the time to speak with a broker. You might be pleasantly surprised by what you can actually afford as the numbers are more favourable than they've been in years. As for Halifax's 1%-3% growth forecast, I'd lean towards the upper end. If demand picks up as expected, driven by improved affordability and lower rates, we could easily see prices nudge closer to 3% growth by year-end. Market fundamentals are aligning: better affordability, easing monetary policy, and a backlog of buyers ready to act. The key message? Don't assume you're priced out. Check your options now before any uptick in prices and competition returns to the market.
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Emma JonesVerified
Managing Director at Whenthebanksaysno.co.uk
Lenders initiated an assault on affordability on multiple fronts during 2025 and, with rates expected to continue to edge down in the weeks ahead and house price growth subdued, 2026 could be the year of the first-time buyer. Existing homeowners may want higher house price growth but equally, without a steady flow of first-time buyers, the whole market grinds to a halt so in the long term modest price growth benefits everyone.
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Justin MoyVerified
Managing Director at EHF Mortgages
A near flatlining of property prices would at least bring some stability to the market. We are already seeing a slowdown in the economy, so, naturally, property prices will see little movement overall, even with the improved mortgage affordability. There are some major challenges in certain parts of the UK where prices are falling much quicker than average, such as London and East Anglia, and in particular, the relative mess of Leasehold properties needs more urgent attention, as we are rapidly creating a market of unattractive and un-mortgageable properties that will distort the market, and make home ownership for FTB's more challenging.
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Bob SinghVerified
Founder at Chess Mortgages
Today’s Halifax House Prices Index follows that of Nationwide a few days ago and pretty much echo each other. With projected increases expected to be in line with inflation means there will be no real growth in 2026. With rates moving in the right direction, affordability will continue to improve as lenders increase their LTI’s for average earners. But what is desperately needed is the return of a Help to Buy-type scheme and stamp duty changes to ensure prices remain in positive territory. The next Bank of England decision will be a key factor in infusing confidence into the busy spring market.
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Ranald MitchellVerified
Director at bad credit mortgage specialists Charwin Mortgages
2026 has so far hit the ‘sweet spot’ for those looking to buy or move. Affordability is at its best in a decade and price growth has cooled, which is exactly what oils the wheels of the housing market. More buyers can finally pass affordability checks, first-time buyers get a genuine foothold and chains have a better chance of completing.
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Babek IsmayilVerified
CEO at homebuying platform OneDome
Affordability is improving by the day and will be further boosted if mortgage rates, as expected, continue to fall in the early stages of 2026. Lenders are fully aware that they need to open avenues for first-time buyers and the level of innovation among banks and building societies was impressive last year. Slow house price growth, coupled with lower rates and innovative lending, could help many first-time buyers get the keys to their dream home in 2026.