Buyers are returning to the housing market at the start of 2026 as confidence improves and mortgage rates fall, Zoopla’s UK House Price Index has revealed.
The average 5-year fixed rate mortgage to 75% LTV has dropped to 4%, the lowest rate since 2022.
There are also 6% more homes for sale than a year ago, giving buyers more choice.
Activity levels are in line with early 2024, but stand 9% lower than last year, when buyers were rushing to complete purchases ahead of the end of the stamp duty holiday.
Richard Donnell, 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. 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.”
The average UK house price increased by 1.2% over the last 12 months, increasing by £3,200 to stand at £269,800 at the end of 2025.
However prices have risen by up to four times faster in more affordable parts of the Midlands, northern England, Scotland and Northern Ireland.
In contrast, smaller price falls of -0.1% were recorded across the South East and South West.
Tanya Elmaz, managing director of intermediary sales at Together, said: “The modest rise in house prices highlights what was ultimately a challenging year for the property market.
“Growth remained subdued as inflation remained stubbornly high, leading to elevated borrowing costs, and uncertainty around the Budget caused many buyers and sellers to pause their plans.
“Even so, the outlook for 2026 is more encouraging. With more homes coming onto the market and mortgage rates continuing to fall, we expect activity to pick up pace as confidence returns. The sector should be ready for a rebound as buyers who delayed decisions now seem to be pressing ahead with their original plans.
“For homebuyers, it may be worth considering speaking to a specialist lender. These finance providers can take a more personalised, flexible approach and assess applications on a case-by-case basis, something that can make a difference for borrowers whose circumstances don’t quite align with mainstream criteria.”