New year, new home? If you’re looking to buy a new home in London in 2026, you might be wondering what to expect.
Post-Budget, it might look like there are slim pickings out there. Uncertainty around the Budget caused house prices to fall across the capital, slowing down the market as buyers and sellers chose to hold off.
And while the Budget didn’t create the major overhaul that people feared, Christmas is not a popular time to sell.
So, will the market ever pick back up? Is 2026 a good time to buy a new home in London?
What to expect in January
With the Budget and Christmas out of the way, it seems likely that things will pick up for buyers in the new year. We’re talking a potential influx of new properties on the market, more stability and greater affordability, given that interest rates were cut to a three-year low last week. All of which is good news for buyers.
“I think there’ll be a lot of choice because lots of people have been sitting on their hands, so to speak, waiting for the Budget. They haven’t even gone onto the market,” says Catherine Merrett at Harding Green.
“What you want when you’re moving house is as much choice as possible. You tend to get that in the spring market, which might come early this year…I think we’ll see a lot of activity.”
“Our view is often that the bigger the pause, the more substantial the rebound,” agrees north London estate agent Jeremy Leaf.
“That said, we don’t expect to see any great increase in house prices because there is still plenty of stock available in most price ranges and continuing underlying concerns about the strength of the economy generally.”
The outlook for first-time buyers
For first-time buyers, 2026 could be a good time to get on the property ladder, experts say.
Not only are house prices likely to remain more stable, but borrowing costs are lower. “Hopefully that’s to stay, but we don’t know,” says Merrett. “Get (your mortgage rate) fixed.”
“How those prices are going to rise long-term, I don’t know, but that’s where you’re going to get good value,” says Merrett. “But that’s quite good for first-time buyers: you can get more space for your money in certain areas.”
At the other end of the market, commentators believe that the introduction of Rachel Reeves’ new Mansion Tax on properties valued over £2 million, which will come into effect in 2028, is likely to prompt sales from downsizers.
“If you can afford properties of those sorts of values, is that really going to stop you now? I don’t think so,” says Merrett.
“You might see more downsizers where people are property-rich, so they’ve got all their money from the property.
“They might find that it does affect their month-to-month spending, so perhaps now is the time to downsize. You might see more properties coming on the market from that sort of seller.”
Nina Harrison, buying agent at Haringtons, believes that downsizers might get good value from smart, new-build flats. “Whatever the developers say, times are hard, and if you’re standing there with a balance of cash, you will get a good deal.”
Guy Meacock from Prime Purchase says that areas like Notting Hill with “a strong following, a heart and soul, amenity and infrastructure” remain popular
Matt Writtle
Unsurprisingly, properties in community-focused areas close to good primary schools remains as popular as ever. Or perhaps even more so, argues Guy Meacock, director of buying agency Prime Purchase.
“We are seeing ever greater value put on the importance of a decent high street and community, with quality of amenity and infrastructure, and we expect properties for sale in areas with these will be popular next year.
“There are also likely to be a lot of school-driven buyers; with London schools outperforming the rest of the country, those areas with good state schools will do well. We have seen a flight to quality with education as school fees have gone up.”
This, says Meacock, drives the continued popularity of central London areas like Hampstead, Marylebone, Notting Hill, Kensington and Chelsea – or, further out, the likes of Highgate, Queens Park, Dulwich Village, Clapham, Wimbledon and Barnes.
Rather than living more centrally, Harrison says that post-Covid, younger clients prefer to commute into work from greener, more suburban areas like Balham or Tooting.
“I think that will carry on,” she says. “I don’t get the impression that the City is recovering.”
Newer alternatives include areas like Colindale and Dollis Hill. “It’s a great Edwardian suburb with huge gardens, and transport is very good,” she says. “Dollis Hill is going up and up and up.”
Merrett says the same of areas like Acton and Ealing, which offer more affordable alternatives to Chiswick.
“If you go a bit further out…You’re going to get more value for money. They still have very good transport links, and they are still very nice areas. It’s just not as expensive.”
Freehold houses, up to the value of around £1.5 million, says Merrett, remain enduringly popular, especially with second steppers.
“They always carry on getting lots of interest, especially where they’re near outstanding primary schools.”
The government’s leasehold reform bill has been delayed
Shutterstock / Frank 2012
In December, details of the government’s Commonhold and Leasehold Reform Bill were pushed back to the new year, in what will come as a setback for the country’s 4.8 million leaseholders — particularly those trying to sell up.
“There’s definitely an anti-leasehold thing: people buy flats, but they want a freehold,” says Harrison.
“People want that sense of ownership – they didn’t seem to mind before. I suppose it’s a function of there being a lot more buyers from overseas.”
More landlords selling is putting more flats on the market. This could be an advantage for buyers in terms of driving a bargain – but some flats may make better investments than others, says Harrison. “Everybody wants that second bedroom just in case.”
Investors might save some money by scrimping on an apartment’s views, but these, says Harrison, are not popular with buyers who’ll live there themselves. “They are the hardest, most difficult ones to shift.”
All of this, though, can produce opportunities for a canny buyer.
“Basements, unfortunately, I would always counsel against,” says Harrison. “They sell, they clearly have a market, but I would counsel against them. Never buy a ground floor, because the front door’s always slamming.”
Renovation work might not be a bad idea if the location is right, says Harrison
Shutterstock / Romaset
“Start looking at the portals now to get a sense of whether there are more things coming up,” says Harrison, who says that more “normal buyers” are using buying advisers to “do the slog and give comfort”.
“Rightmove is your best friend,” agrees Merrett. “Research the areas, make sure that it is an area where there is a lot of activity going on; do your research on property prices. That research part is very important.”
And if you see a property you like, get a sense of your negotiating power by asking the estate agent some strategic questions, she adds.
How long has it been on for? What level of interest have they had? Have there been viewings at the weekend?
“If you’re looking to buy, the first thing you should do is peak to a couple of mortgage brokers and make sure you know exactly what your affordability is before you start searching, because otherwise you end up wasting a lot of time,” says Merrett.
“As soon as you see that property that you want to buy, you want to have your mortgage approval in principle ready, your solicitor ready. You then look very strong, especially if it is a competitive situation.”
Don’t drive too hard a bargain
Conditions in 2025 have favoured buyers, says Camilla Dell, founder of Black Brick. “At Black Brick, on average we saved our clients £385,000 from asking prices (seven per cent).
“I expect conditions in 2026 to continue to favour buyers, but in my experience trying to time the exact bottom can risk missing out on your dream home. The best time to buy is when others are fearful and there’s plenty of stock.”
Harrison agrees, having seen buyers “flinging in the lowest possible offers” post-Budget. “Be careful of that. You do not want to insult the seller,” she advises. “Any sensible seller has a plan B…They won’t be held to ransom.”
In addition to Rachel Reeves’ new Mansion Tax on homes above £2 million, Londoners in boroughs like Kensington and Chelsea, Hammersmith and Fulham, Wandsworth, Westminster, the City of London and Windsor and Maidenhead are likely to see significant increases —perhaps as much as 75 per cent—in council tax.
“Be mindful of annual running costs,” advises Dell. “Our advice is to look carefully at what you are buying, (including) the annual costs today compared to what they will be when these changes come in, and to use that as part of your negotiation strategy on price.”
Renovation work might not be a bad idea – if the location is right
“I say to my clients: if it’s where you want to be, do not run away from it,” says Harrison. “There’s no doubt you’d have to rent somewhere else, or stay with parents, or camp on your office floor. But if it’s a good enough space, don’t be afraid of that.”