Cheaper mortgages, better wages and flat price growth encourage homebuyers

Despite reporting flat price growth in February, Rightmove reported an extraordinary start to the year, with average asking prices for homes up by 2.8% at the start of 2026. While price growth has eased now, better affordability, driven by higher wages, lower interest rates and increased supply, has boosted buying activity in the UK and London property markets.

Key highlights from February 2026

• Average asking prices remained flat (0.0%) in February, after a strong 2.8% monthly increase in January 2026.
• The average price of a home in London (£681,292) is more than 85% the national average of (£368,019).
• Average earnings are up by 4.7% YoY.
• The number of homes for sale is at an 11-year high for this time of the year.
• Average mortgage rates are dropping below 4% as 40% of homes are now cheaper to buy with a mortgage than rent.

The number of homes for sale is highest in a decade

While Rightmove reported the number of new homes listed for sale at an 11-year high, even Zoopla reported that February was on track to record the highest monthly number of new listings in a decade. With already 6% more homes for sale than a year ago, this increase is expected to keep further price inflation in check, after 2026 opened with an average asking price increase of 2.8%.

Strong wage growth and falling mortgage rates improve affordability

Average earnings in the UK are up by 4.7% YoY (17% over the last three years), which is more than the cumulative property price growth over the same period. An improvement in market conditions has led the Bank of England (BoE) to cut interest rates to 3.75%, with further rate cuts expected for the rest of the year. While Rightmove’s tracker shows the average 2-year fixed mortgage rate at 4.28%, Zoopla has reported that both 2-year and 5-year fixed deals have dropped below 4%.

Buying is getting cheaper than renting for many first-time buyers

With mortgage rates at their lowest in four years, Zoopla also reported that 40% of homes currently listed for sale on its portal are cheaper to buy with a mortgage than rent locally. Improved affordability directly impacts sales, as the number of sales agreed is 9% higher than two years ago. Sales at the start of 2025 were exceptionally high, as buyers tried to beat the Stamp Duty deadline last year.

Inflation eases to 3%, supporting further rate cuts

The UK inflation rate, which had been stuck at 3.4% at the end of last year, fell to 3%, its lowest level in almost a year. While market experts link a drop in inflation to potential BoE rate cuts, it should be noted that inflation remains well above the BoE’s 2% target. However, with overall mortgage rates lower than last year, typical new buyers are already saving up to £100 per month on their repayments. Here are some more reasons why UK property remains a good investment for overseas buyers in 2026.

Meet our Directors in Hong Kong and Bangkok this March

Our Directors, Anita Mehra and Marc von Grundherr, will be on an Asia tour this March to meet with investors and share updates and investment opportunities in the London property market. They will be in Hong Kong from 13 to 17 March, while our team in that region showcases exciting new developments by Barratt Redrow. They will then travel to Bangkok from 18 to 21 March to meet with investors in Thailand.

Waterfront property showcases in India

Our India offices in Delhi and Mumbai are all set for the upcoming investor showcase of two new river and canal-side property developments on 14 and 15 March. These include Grand Union in Wembley, London and Reading Riverworks in Reading. Along with stunning views of the River Thames and Grand Union Canal, these developments also offer strong investment potential.

Rents in London are easing as supply increases

While ONS reported a 3.5% growth in monthly rents across the UK, rental inflation in the capital continued to slow, rising by just 1.1% in the 12 months to January 2026. However, despite differences in rent hikes, the average rent in London at £2,253 is still nearly 65% higher than the UK average of £1,367, making it an attractive place to invest in.

Rising supply is one of the main reasons price growth has slowed, as Rightmove reported a 9% and Zoopla a 15% increase in rental supply in their respective year-end rental reports for 2025. In London, the supply boom is even bigger, as LonRes reported a 36.6% increase in rental stock across prime London postcodes.

Many landlords are choosing to incorporate

A record 66,587 new limited companies were formed in the UK to hold buy-to-let properties in 2025. While this was an 8% YoY increase, the number of such BTL companies has surged by 363% over the last decade. While landlords continue to seek the most tax-efficient ways to structure their property investments, many factors need to be considered.

At Benham and Reeves, our lettings experts are always at hand to help local and overseas landlords, investors, homebuyers and sellers with the right advice, as we operate through our 21 London branches and 13 international offices. Whether it is exploring the latest BTL trends in London or getting up to speed on new reforms under the Renters’ Rights Act 2025, you can get in touch with us for all your property needs.