A property expert had shared his predictions for the housing market in the first three months of 2026.

Mish Liyanage, Founder and CEO of Mistoria Group, is optimistic about steady growth in house prices as the number of sales return to pre-pandemic levels.

Throughout his 20 years experience in sourcing and letting a wide range of properties, Mr Liyanage has weathered turbulent markets. He said: “It’s a relief that all signs suggest stability and some positive growth to come.”

A recent study suggests the average house price is currently £280,000 but this may exceed £300,000 by the end of 2026. This roughly equates to a 1 to 4% growth in house prices.

“This is good news for house-owners with long-term investments as they’ll see a slight upturn in property value.”

“Expected Bank of England rate cuts suggests the economy is stabilising. This will improve consumer confidence and prompt growth in the housing market.”

“The ratio of house prices to consumer income has fallen to the lowest level since 2015. This is usually a good indicator of house affordability. It will prompt market activity and encourage a gradual increase in house prices throughout the first quarter of 2026.”

“But we’ve got to take these short-term improvements with a pinch of salt. Since the late 20th century, houses have become significantly less affordable. And we’ll only start seeing the effects of Rachel Reeves’ Autumn budget from next April.”

How has the Autumn Budget affected the market?

The housing market stalled somewhat in the lead up to Chancellor Rachel Reeves’ Budget. Buyers were apprehensive about policies that could downgrade potential property investments.

The November Budget means landlords will pay more tax on income made from renting out properties from April 2026.

But the budget left private homeowners largely untouched, as the ‘mansion tax’ applies to less than 1% of properties in England. This break from punitive policies may spur buyers into action.

It’s still important to consider other budget decisions that will indirectly affect housing prices. The ratio of house prices compared to average earnings is lower at the moment, but the Autumn Budget may further squeeze disposable income.

While Rachel Reeves has raised the minimum wage again, fiscal drag brings more people into higher tax brackets.

Some of the biggest losers from the Autumn Budget will be early career professionals who won’t see an income boost but will be paying more tax sooner. For this group, consumer confidence will probably stay low. Getting on the housing ladder will seem more out of reach.

What do changes in mortgage rates mean?

Mortgage rates peaked the year following Liz Truss’ ‘mini-budget’ in 2022.

The Bank of England last cut rates in August this year. Since then, they’ve been holding steady. But most economists are betting that the UK central bank will start lowering interest rates in the new year. A more stable economic environment could improve consumer sentiment.

A decline in mortgage rates would make the overall process of house buying more affordable and buyers may look to take advantage of repaying less interest on property. Growing market demand and competition would increase property value for investors.

While consumer conditions are becoming more favourable, mortgage rates remain significantly higher than 10 years ago when they averaged 2%. Now mortgage rates are closer to 4%.

What’s happening in the North West?

2026 looks good for the housing market in the North West which is expected to outperform the national average. Housing demand is strong in major cities as improved transport links and job opportunities make Manchester and Liverpool more appealing places to live.

This means property investments in the North West will see value and house prices grow faster than southern markets.