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UK Housing Market Shows Resilience Despite Economic Headwinds

  //house-home.news-articles.net/content/2026/01/1 .. shows-resilience-despite-economic-headwinds.html
  Published in House and Home on Sunday, January 18th 2026 at 19:21 GMT
      Locale: UNITED KINGDOM

London, UK - January 19th, 2026 - Despite ongoing economic headwinds and stubbornly high mortgage rates, the UK housing market continues to demonstrate surprising resilience, with the average house price holding steady at GBP374,300, according to the latest data from Rightmove. While this represents a modest decrease from the peak values seen in spring 2023, the market's stability is defying widespread predictions of a significant downturn.

A Market in Equilibrium?

The figures, released as part of Rightmove's monthly house price index, reveal a complex picture. While the average asking price is marginally down (0.2%) compared to January 2025, the overall sentiment is one of cautious optimism rather than impending collapse. The consistent demand from prospective buyers, coupled with a continuing shortage of available properties, are key factors underpinning this stability.

Tim Bannister, Director of Research at Rightmove, highlighted the ongoing tension between buyer desire and affordability. "The market remains resilient, although affordability is still stretched due to high mortgage rates," he stated. "We've observed sustained buyer demand, even in the face of challenges. People still want to move, but their aspirations are being carefully balanced against what's realistically achievable financially."

Demand Remains Strong, Despite Affordability Concerns

One of the most surprising aspects of the data is the increased level of buyer interest. The number of prospective buyers contacting estate agents is a significant 23% higher than it was a year ago. This suggests a continued desire to own property, particularly among first-time buyers and those relocating. However, this enthusiasm is tempered by the reality of higher borrowing costs. Mortgage rates, persistently hovering above 6%, are squeezing affordability for many potential homeowners, impacting the speed at which transactions are completed.

The number of sales agreed is up 15% year-on-year, indicating a healthy level of activity, but remains 11% below the frenzied pace seen in 2022. This suggests a market adjusting to a new normal, with fewer rushed decisions and a more considered approach to buying and selling.

The Inventory Factor: A Persistent Constraint

The persistent shortage of properties available for sale continues to act as a critical support for house prices. This lack of supply prevents a more substantial price correction, creating a situation where demand is constrained not just by affordability, but also by the sheer scarcity of suitable properties. The issue isn't simply a lack of new builds; it's a broader reluctance among existing homeowners to put their properties on the market, possibly due to concerns about securing their own next home at potentially higher rates.

"There is still a shortage of properties available for sale, which is supporting prices," Bannister explained. "The market is not crashing, but it is settling into a more sustainable pace." This 'sustainable pace' suggests a period of plateaued prices, rather than a dramatic collapse.

Looking Ahead: What to Expect in 2026?

While predictions for the UK housing market have been consistently wrong in recent years, several factors will likely shape its trajectory in the coming months. The performance of the broader economy, inflation, and most crucially, the future direction of interest rates, will all play a pivotal role. If inflation cools and the Bank of England begins to ease interest rates, affordability could improve, potentially stimulating further price growth. However, a renewed surge in inflation could trigger a further tightening of monetary policy and dampen buyer enthusiasm.

Furthermore, government policies aimed at increasing housing supply, such as incentives for developers and reforms to planning regulations, will be closely watched. Any significant increase in the number of new homes being built could gradually ease the supply shortage and exert downward pressure on prices. Ultimately, the UK housing market remains a complex and dynamic environment, and while resilience has been the defining characteristic so far, future trends remain subject to change.