Very soon, it will be just 100 days until the end of 2025, and for property, that’s enough time to give us clues about what 2026 might look like.
House prices have proved stubborn in spite of headwinds, dropping by just 0.1 per cent in the last year. However, in real terms, the drop is far higher given that wages have increased by some 5 per cent in the same period and as we all know to our cost, prices of food, holidays and consumer goods have risen sharply. The property has failed to keep up.
But, in spite of all that, after all the talk of a crash, what we’ve actually seen is a patchy slowdown. Some areas have softened, others have held their ground.
Between now and the New Year, expect more of the same. Prices are likely to drift sideways, maybe slipping by 1–2 per cent nationally, but some areas will be immune (the north) and others will be hit harder (London, south east and south west).
House prices are likely to slip by 1–2 per cent nationally
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Buyers remain cautious, sellers are still clinging to yesterday’s valuations, and that stalemate means sluggish sales for estate agents.
Amongst the myriad of unknowns is Rachel Reeves' Budget in November. The nervous anticipation of it has already caused middle-England to delay big-ticket purchases.
Fewer are willing to increase their outgoings or invest in a buy-to-let if they have no idea what their net income is going to look like next year.
If it is Labour’s intention to dampen the market, well, they have already succeeded without having to increase tax by a penny.
Rentals, meanwhile, are surging. With demand sky-high, first-time buyers stuck in limbo, and supply versus population bringing us to the breaking point, tenants aren’t getting off lightly.
Over the next 100 days, expect rents to climb, especially as student lets and new job moves add pressure. Landlords are grappling with tighter rules, which have caused many to give up. Tenants will feel the effect of this most sharply. On interest rates, there’s tension.
There’s what the person in the street would like, and then there’s what we’re likely to get.
Homeowners and landlords alike would love to see sharper cuts – easing mortgage bills and giving confidence back to the market. This would also help to suppress rent rises.
But the Bank of England is still fighting inflation. That means caution. The likely scenario is a single 0.25 per cent cut before Christmas – if we’re lucky. It won’t transform affordability overnight, but it will help enormously.
Beyond the numbers, a couple of other forces could shape the next 100 days.
LATEST DEVELOPMENTS
First-time buyers are flocking to Manchester | GETTYEvents overseas could throw the economy even further off-balance. Fuel prices could increase because of events far away.
Turmoil in the government could see, as with the Tories before them, the fight for survival overtake the needs of the country. Expect bold promises on housebuilding and affordability, but will we (ever) see it?
The outlook? Prices steady but subdued, rents still climbing, and mortgage costs only easing slightly – less than hoped. In other words, the property market is on hold until 2026 – then it's anyone's guess!
Jonathan Rolamde is a property expert and the founder of House Buy Fast. For more information, visit www.jonathanrolande.co.uk
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