Stacey Eden, partner and national head of real estate at RSM UK, commented: “The latest house price index figures show steady growth over the past three years, a worrying picture given wage inflation over that period. This puts the market in a challenging position going forward in the year ahead, with mortgage rates rising and an expected rise in inflation.
“Weak UK economic growth, concerns around the UK economy and the impact of sluggish real wage growth are hurting housing demand along with tax increases. This is demonstrated by a 20% or more decline in transactions reported by HMRC on a non-seasonally adjusted basis for the months to January 2026.
“These constraints to the region’s growth are also having a significant impact on development feasibility, with our recent Real Estate 360 survey* finding that concerns about the cost of development, including regulatory costs and planning delays, are making housing developments less viable. If house price growth continues to show a broadly flat trajectory, ensuring that development is viable will remain a major challenge.
“After today’s 3% inflation data and expected future growth due to the conflict in the Middle East, the concern is that house prices will continue to move downwards during the first half of 2026.
“While the effects of geopolitical instability and headwinds are expected to persist in the coming months, measures such as stamp duty reform or further government support for first-time buyers, would go a long way in re-stimulating the market and removing some of the negative pressures surrounding property buying. This is further exacerbated by the current unattractiveness of the buy-to-let market for individuals with punitive taxation on landlords as well as the Rent Reform Act encouraging them to leave the market and invest their money. Real estate outside the UK.