UK house prices have returned to growth in the first quarter of 2026, following a period of decline at the end of 2025. Research from Benham and Reeves’ Property Market Index Review reveals a modest 0.3% rise in average prices, signalling a cautious recovery in the property market.

Quarterly Price Growth Returns

The combined data from Halifax, Nationwide, and Rightmove shows that average UK house prices increased to £305,092 in Q1 2026, reversing a 0.5% fall recorded in the final quarter of 2025. This marks a 0.7% increase compared with the same period last year, indicating a stabilising market after recent volatility.

London also saw a positive shift, with average property values rising by 0.6% to £584,690 during the quarter. This follows consecutive falls in the third and fourth quarters of 2025, although prices in the capital remain 0.5% below their level a year ago.

Seller Confidence and Market Dynamics

Marc von Grundherr, director at Benham and Reeves, commented on the market’s cautious optimism: “The first quarter of 2026 has seen the property market regain some composure following the slight loss of momentum observed at the end of last year, with house prices across both the UK and London returning to positive quarterly growth.”

He added that the recovery is measured but reflects the market’s resilience amid ongoing economic uncertainty and cautious consumer sentiment. However, a notable development is the widening gap between mortgage-approved prices and asking prices, suggesting sellers are becoming more confident and firm in their pricing expectations.

Widening Gap Between Asking and Approved Prices

The difference between mortgage-approved prices and asking prices widened during the first quarter of 2026. Mortgage-approved prices averaged £286,729, while the average asking price stood at £369,028, creating a gap of 28.7%. This is an increase from 27.9% in the final quarter of 2025, reversing a trend of three consecutive quarterly reductions.

In London, the gap narrowed slightly for the third consecutive quarter, with mortgage-approved prices averaging £538,181 and asking prices at £680,687, a 26.5% difference down from 26.9% in Q4 2025.

Disparity Between Asking and Sold Prices

The gap between asking prices and completed sale prices also widened. Average sold prices across the UK were £268,387 in Q1 2026, which is 27.3% below the average asking price. This gap increased from 25.9% in the previous quarter, indicating that buyers remain cautious and price sensitive.

In London, sold prices were 19.8% below asking prices, with this difference widening for a third consecutive quarter. Mr von Grundherr emphasised the importance of realistic pricing, stating: “The widening gap between asking prices and achieved sold prices indicates that buyers are still exercising caution and remain highly price sensitive. As a result, realistic pricing continues to be absolutely critical when it comes to securing a successful sale.”

What this means for landlords

For landlords, the return to modest price growth offers some reassurance of market stability after recent falls. However, the widening gap between asking and achieved sale prices highlights the need for realistic valuation strategies when considering sales or rent reviews.

Seller confidence appears to be rising, but buyers remain cautious, which could translate into longer negotiation periods and the necessity for competitive pricing to secure transactions. Landlords should remain mindful of these dynamics when managing portfolios or advising tenants on market conditions.

Source: Based on reporting from Property118

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