Stacy Eden, partner and national head of real estate at RSM UK, commented: “The latest house price index figures show static growth over the last three years, a concerning picture given wage inflation over that period. This places the market in a challenging position for navigating the year ahead, with mortgage rates on the rise and expected hikes in inflation.

“Weak UK economic growth, paired with concerns around the UK economy and the effects of sluggish real-wage growth are damaging the housing demand, alongside tax rises. This is demonstrated by the 20% or so reduction in transactions reported by HMRC on a non-seasonally adjusted basis for the month to January 2026.

“These barriers to sector growth are also having a significant impact on development viability, with our recent Real Estate 360 survey* finding that concerns around the cost of development including regulatory costs and planning delays are making housing development less viable. If house price growth continues to show a broadly flat trajectory, ensuring developments are viable will remain a major challenge.

“Following today’s inflation figures of 3% and expected rises in the future driven by the conflict in the Middle East, the concern is house prices will continue to edge downwards during the first half of 2026.

“With the impacts of geopolitical volatility and headwinds expected to persist in the coming months, measures such as Stamp Duty reforms, or even further government support for first time buyers, would go a long way to re-stimulate the market and remove some of the negative pressures around purchasing property. This is further compounded by the current unattractiveness of the buy-to-let market for individuals with the Rental Reform Act along with penal taxation on landlords, encouraging them to leave the market and invest their money outside UK real estate.”