House prices show positive first quarter compared to a sluggish end to 2025

The latest Property Market Index Review by London lettings and estate agent, Benham and Reeves, has revealed that the property market lost momentum during the first quarter of 2026, with house prices showing signs of recovery following the previous quarter’s fall.

The Benham and Reeves Market Index Review

The Benham and Reeves Property Market Index Review* is a quarterly accumulation of house price data from the top four existing indices, providing the most comprehensive view of UK and London house price performance.

It looks at where the average house price sits overall when taking into account mortgage approved house prices from Halifax and Nationwide, seller expectations via the Rightmove House Price Index, and sold prices from the UK House Price Index.

It also highlights how the gap has changed between buyers and seller expectation, as well as asking price and actual sales price, on a quarterly basis across London and the UK.

Current property values

Based on a geometric mean of all four existing data sets, the index from Benham and Reeves shows the average UK house price sat at £305,092 in Q1 of this year.

This marked a 0.3% quarterly increase, following a -0.5% drop in the previous quarter (Q4 2025).

The long-term view also remains one of positivity, with current house prices remaining 0.7% higher when compared to the previous year, Q1 2025.

In London, the average house price in Q1 2026 sat at £584,690. This marked a 0.6% increase for the quarter, and a positive sign of market recovery following consecutive drops over the previous two quarters (Q3 and Q4 2025).

However, the annual picture continues to show a slight decline, with prices now -0.5% down on the year. While this is indeed a decline, it’s such a small one that the London market can be described as standing firm in the face of unpredictable economic conditions.

Market Gap Between Mortgage Approval Price (Buyers) & Asking Price (Sellers)

In Q1 2026, the market gap between the average mortgage approved price of a buyer (£286,729) and the asking price expectation of a seller (£369,028) sat at 28.7%.

This marked a widening of the gap over the past quarter with Q4 2025’s gap measuring 27.9%. It also puts a stop to three consecutive quarters in which the gap between approval prices and asking prices narrowed.

This suggests that sellers may be feeling more confident in the face of stronger buyer demand and therefore emboldened in their asking prices.

In London, the gap between mortgage approved house prices (£538,181) and seller asking prices (£680,687) actually narrowed, standing at 26.5% compared to 26.9% in the previous quarter. This marked a third consecutive quarterly reduction, although a slight quarterly uptick in asking prices means this pattern may come to end over the next quarter.

Market Gap Between Asking Price (Sellers) & Sold Price (Buyers)

The latest index by Benham and Reeves shows that the difference between the average UK asking price and the average sold price has also continued to fall.

Across the UK, the average sold price in Q1 2026 stood at £268,387, -27.3% below the average asking price of £369,028. This marks a widening of the gap compared to Q4 2025 when it measured -25.9%.

In London, the difference between asking price and sold price sits at -19.8%, a widening of the gap for the third consecutive quarter.

Director of Benham and Reeves, Marc von Grundherr, commented:

“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.

While the pace of recovery remains measured, the fact that values have stabilised and started to edge upward again demonstrates the underlying resilience of the market, particularly against what continues to be a backdrop of economic uncertainty and cautious consumer sentiment.

At the same time, we’ve seen a notable shift in seller confidence across the wider UK market, with the gap between mortgage approved prices and asking prices widening once again after several quarters of improvement. This suggests that many sellers are feeling more optimistic about market conditions and are therefore becoming firmer in their pricing expectations.

However, 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.

In London, the market remains remarkably stable. Despite a marginal annual reduction in values, quarterly growth has returned and the ongoing narrowing of the gap between buyer affordability and seller expectation suggests that the capital’s market continues to move toward a healthier level of alignment.”

UK

LONDON