House prices rose by 0.4% in February, according to Nationwide. Annual growth to February was 1.0%, unchanged from January. This is in line with the total annual growth seen through the 2025 calendar year.

Sales agreed to February indicate a recent improvement in activity following the November budget. February data from TwentyCI gives some cause for optimism, with agreed sales above the level of a year ago for the first time since September. This indicates a stronger start to 2026. More lagged mortgage approvals to January are down, reflecting some end of year nerves around the budget. But completed transactions remain in line with the 2017-19 average and this level of activity is likely to continue, although greater downside risk has emerged.

The UK’s economic outlook remains subdued, with some forecasters noting that prolonged geopolitical tension could add to existing pressures. While at this stage, it remains unclear what this may mean for the UK housing market in 2026, it is likely that needs-based buyers will continue to be the dominant driver in the short-term, with limited upward pressure on prices. This will be a continuation of current market conditions, with most surveyors reporting in January’s RICS survey that demand was falling while stock levels remain high.

Longer term, mortgage rates are at risk of increasing, curtailing improvements to affordability. Several mortgage lenders have begun raising mortgage rates, with concern that global unrest will feed through to higher levels of inflation. Oxford Economics expects that the Bank of England will hold rates at the next MPC meeting, with central banks now more reactive to second-round effects of energy inflation following the 2022 invasion of Ukraine. A shorter conflict will see more limited inflation with a pause in planned cuts to mortgage rates, whereas a prolonged conflict will have longer term inflationary effects and could lead to higher mortgage rate rises. Lenders are likely to be cautious until greater clarity emerges.

More localised house price data from November shows that the North East and Scotland had the greatest price growth, particularly East Renfrewshire (7.5%), Renfrewshire (7.0%) and Sunderland (6.8%). The weakest growth was in Ceredigion (-8.1%), Brent (-7.6%) and Rother (-4.9%).