As 2025 comes to an end, the UK property market is settling after a long reset. Prices have largely stabilised. Confidence is edging back. And now interest rates are starting to do investors a favour.
That matters because 2026 looks like the “quiet entry” year. In other words, it’s the point where sentiment improves before pricing fully catches up.
Savills’ latest mainstream forecast backs that view. It expects UK house prices to rise 24.5% over the five years to 2029—around £86,300 added to the average home.
Strong Five Year House Price Growth Forecasts
Savills expects growth to be steadier in the near term. However, it sees momentum building as affordability improves and transactions recover.
For investors, that’s the window: buy when competition is improving, but pricing hasn’t fully repriced.
3 Reasons Why 2026 Is a Good Year to Invest in UK Property
1. Interest Rates and Affordability Turning a Corner
The Bank of England cut Bank Rate to 3.75% on 18 December 2025. As a result, borrowing costs should continue to ease versus the 2023–2024 peak, improving affordability and widening the buyer pool.
Importantly, improving affordability tends to lift transaction volumes first. Prices often follow.
2. Strong UK Rental Demand in 2026: Demand Continues To Outpace Supply
Rental demand is set to remain resilient into 2026. That’s largely because buying is still expensive for many households, while available rental stock remains constrained.
Zoopla reports UK rents rose 2.2% over the last 12 months, with the average new-let rent at £1,320 per month (as of its December 2025 report, using data to October 2025).
Looking ahead, Zoopla expects 2.5% growth in 2026.
Meanwhile, major cities keep pulling demand through jobs, universities, transport upgrades and regeneration. Add flexible working and year-round event calendars, and you also have a case for short-term lets in the right locations (subject to local rules and building restrictions).
3. Regional Growth Hotspots: Beyond London
London sets the headline. However, the best growth/value mix is often regional.
Savills’ regional outlook points to stronger growth across the North and other more affordable regions through 2030 (with Yorkshire & The Humber among the leaders)
That’s exactly why Manchester and Leeds remain on so many investor shortlists: lower entry prices, deeper tenant demand, and regeneration-led uplift.
London’s Role in a Balanced Portfolio
While price growth in London may be slower than in some regions, it remains a key hub for institutional and international investors. Prime central London, and ideally located properties, continue to attract buyers, especially when combined with high-yield approaches like short term let strategies.
Looking for a London alternative? Forum House in St Albans is just an 18-minute train to London St. Pancras and starts from £280,000 (compared to the London average of £441,000 in September 2025). Investors can also benefit from short-term lets, offering potential yields of up to 12.45%.
Off-Plan Property: A Smart Investment Choice for 2026
Off-plan can be a strong 2026 strategy because it lets you secure today’s price while the wider market improves. It also tends to offer staged payments, which helps cashflow planning.
That said, it only works when fundamentals stack up: end-value realism, developer track record, local rental depth, and a clear exit/refinance plan.
For example, Piccadilly Wharf is a flagship development within the £1.5 billion Mayfield regeneration.
Positioning for Growth in 2026 and Beyond
In short: 2026 looks like a practical entry point. Rates are easing. Forecasts remain positive. Rental demand is holding up.
The investors who do best usually keep it simple:
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buy well-located stock with real tenant demand,
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spread risk across regions,
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and underwrite conservatively.
If you want to sense-check a deal, book a free strategy call with our team now.
(Note: yields and growth projections vary by unit, finance terms, regulation and voids. Always run numbers on a per-property basis.)
Sources:
- https://www.savills.co.uk/insight-and-opinion/savills-news/379497/average-house-price-to-increase-by-24.5–over-the-next-five-years
- https://www.bankofengland.co.uk/monetary-policy/the-interest-rate-bank-rate
- http://zoopla.co.uk/discover/property-news/rental-market-report/
- https://moneyweek.com/investments/house-prices/savills-average-house-prices-grow-forecast
- https://www.gov.uk/government/news/uk-house-price-index-for-september-2025
