2026 has seen a positive start for the housing market. Buyer confidence is back and sellers and their agents are breathing a well-deserved sigh of relief as a result after faith in the market had plummeted ahead of the autumn budget.
So why has buyer confidence improved and, crucially, can the momentum be maintained?
Confirmation of the autumn budget
The long delay in confirming the autumn budget details at the end of November undoubtedly had one of the biggest impacts on buyer confidence, particularly in the south-east and London markets.
It led to months of rumours and then activity pausing as sellers waited to sift the facts from the fiction. Since its details were unveiled, however, buyers and sellers have been able to plan with certainty. The so-called mansion tax will now only apply to properties of £2 million and above. Previously, it had been rumoured that a new property tax would hit homes of £500,000 and above – a much higher proportion of which would have been in the area.
As a result, buyer confidence surged in January, with Rightmove reporting the largest-ever price increase seen in the month and demand jumping by 57% in the two weeks after Christmas compared to the two weeks before as buyers returned.
Improved affordability
The biggest boost to buyer confidence, however, is improved affordability. This is largely driven by cuts to the base rate over 2025, which have helped to drive mortgage rates down to their lowest since 2022 last month, although rate rises were announced at the beginning of February.
The Monetary Policy Committee is expected to be cautious with further base rate cuts, however. After its December reduction, it narrowly held the current 3.75% rate at its February meeting by 5 votes to 4, signalling further cuts later this year.
As well as lower rates, several changes to mortgage affordability have also improved confidence. Most recently, lenders such as Nationwide and NatWest have boosted loan-to-income rations to 6x in recent weeks. According to analysis by Moneyfacts, this could mean average mortgage payments falling back to around 40-41% of average gross salary later this year, a level last seen in 2021. These changes are expected to draw out a much higher proportion of first-time buyers in 2026.
Nationwide says that improvements in affordability were witnessed across the UK over the past year, with London seeing the largest improvement in affordability for the second-year running, thanks to relatively weak house price growth, solid earnings growth and lower interest rates.
Buyer confidence isn’t guaranteed and the market is far from certain. But with projected price rises of around 2% for 2026, a continued glut of properties to choose from and the return of first-time buyers, it seems buyer confidence is certainly stronger than it has been for some time.
Proctors is an independent network of individual estate agent businesses with branches in Beckenham, Bromley, Park Langley, Petts Wood, Shirley and West Wickham. We’ve been buying, selling and letting in these areas since 1946. Get in touch to find out how we can help you with your property requirements.