As the UK housing market navigates a period of moderation, first-time buyers are poised to play a pivotal role in driving sales in 2026. While house prices across the country rose less than expected in 2025, with the average home valued at £272,998, experts forecast a more moderate increase of 2% to 4% in the coming year.
The cooling of the market can be attributed to a combination of factors, including the expiration of a stamp duty tax break and buyer uncertainty stemming from policy changes and global economic conditions. However, this shift has presented a silver lining for those looking to take their first step onto the property ladder.
According to data from leading mortgage lenders and estate agents, monthly mortgage costs for first-time buyers as a share of income are at their lowest levels since 2022, thanks to falling interest rates and steady earnings growth outpacing inflation. The Bank of England has been slower to cut interest rates than expected, but with inflation cooling, it has delivered a pre-Christmas cut, taking borrowing costs to their lowest in almost three years.
“Buyers might be able to purchase with a 15% or 10% deposit, and that makes a huge difference, particularly in London and the South-East,” said Emily Williams, a director of residential research at Savills. “That’s certainly knocking two or three years off the amount of time that you need to save for deposits.”
The relaxation of mortgage rules, allowing for larger loans with smaller deposits, coupled with the City watchdog’s plans to assist first-time buyers and self-employed individuals, are further bolstering the accessibility of homeownership.
While the market remains sluggish, with properties taking longer to sell, the outlook for rental growth is also expected to slow, from the rapid increases of recent years. “Even though rental growth will slow, growth is probably going to come down fairly slowly, and that’s certainly what we’ve seen in the last few quarters,” said Robert Gardner, the Nationwide chief economist.
As the housing market navigates this period of moderation, first-time buyers are poised to play a pivotal role in driving sales, taking advantage of improved affordability and supportive policy measures to achieve their homeownership aspirations.