Stabilising house prices and falling mortgage rates offer renewed hope for first-time buyers
Propertymark says forecasts of modest house price growth in 2026, alongside falling mortgage rates, point towards a housing market that is beginning to stabilise, offering renewed hope for first-time buyers, while wider affordability challenges remain.
As lenders continue to reduce mortgage rates following improved market conditions, monthly repayments are becoming more manageable for aspiring homeowners. This shift is helping to rebuild confidence among buyers, particularly those stepping onto the property ladder for the first time and who have been priced out of the market in recent years.
At the same time, expectations of modest house price growth suggest a move away from the volatility experienced over recent years. Propertymark believes this combination of easing borrowing costs and more realistic price movement signals a healthier, more balanced market rather than a return to rapid price inflation.
However, Propertymark warns that lower mortgage rates alone will not solve the structural barriers facing those trying to buy their first home. High house prices, rental costs that limit the ability to save, deposit requirements, and the pace of homebuilding continue to present significant challenges.
In reviewing transaction trends across the UK, Propertymark highlights the impact of temporary, pandemic-related property tax support as well as recent economic and financial pressures within the market, which have played huge roles in transaction fluctuations.
In 2021, the number of properties exchanged stood at 1,073,308, compared to 920,052 in 2025. This 14.3% drop over four years demonstrates that market constraints remain and must be addressed to support long-term stability.
In England and Northern Ireland, the nil-rate band for Stamp Duty Land Tax was raised significantly for residential transactions during 2020–21, reducing upfront costs and helping stimulate sales; once these measures were tapered and then removed, the total cost incurred when buying increased again.
Scotland’s Land and Buildings Transaction Tax also saw a temporary rise in its nil-rate threshold in that period. In Wales, the Welsh Government temporarily increased the nil-rate band of Land Transaction Tax from £180,000 to £250,000 for many residential transactions between July 2020 and June 2021.
These temporary thresholds reduced tax bills for a wider range of buyers and are widely understood to have supported higher transaction volumes at the time, and their expiration has contributed to lower activity in subsequent years alongside broader affordability pressures.
Propertymark stresses that these examples clearly demonstrate how property tax holidays or more favourable bands and thresholds can act as a catalyst for market activity. When upfront costs are reduced, buyers are more confident to proceed, transactions complete more quickly, and market momentum improves.
Crucially, higher transaction levels generate a significant knock-on benefit for the wider economy, as home movers spend on white goods, furnishings, home improvements, tradespeople, and professional services such as conveyancers, surveyors, and financial advisers. Propertymark urges governments across the UK to recognise that well-designed property tax reform is not simply a housing policy tool, but an effective lever for broader economic growth.
In the rental market, the industry body highlights that a major driver of rising rents is the continued lack of supply against a backdrop of growing demand. This pressure has been fuelled in part by higher mortgage rates in recent years, alongside persistent tax increases and rising operating costs for landlords, all of which have constrained rental stock.
Nathan Emerson, CEO of Propertymark, comments:
“Lower mortgage rates are a positive step and will undoubtedly help many first-time buyers reassess their options. Combined with modest house price growth, this shows the market is finding a more sustainable footing.
“However, affordability pressures remain complex, and property tax thresholds have failed to keep pace with rising house prices and wage growth over the past decade, increasing the tax burden on buyers.
“Propertymark believes reform is needed to create a fairer, more responsive property taxation systems across the UK that reduce upfront costs, support first-time buyers, and improve market mobility. Alongside this, action to boost housing supply and targeted support for those struggling to save for a deposit will be essential if homeownership is to become a realistic option for more people.”
Propertymark highlights the critical role played by professional agents in guiding buyers through a changing market, helping them with realistic price points, providing market expertise, and helping them handle overwhelming documents and information by explaining each step.
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Breaking Property News 5/10/26
