The UK property market entered 2025 with renewed energy after several years of uncertainty. Buyer demand strengthened, supported by more favourable lending conditions and government measures aimed at encouraging transactions. Prices rose by almost 5% year-on-year in early 2025, while activity was lifted by buyers seeking to complete deals ahead of Stamp Duty Land Tax adjustments. Analysts expect the momentum to continue into 2026, though growth is forecast to be steadier and regionally uneven. With mortgage affordability improving and interest rates expected to ease, the market outlook points towards further recovery, albeit at a measured pace.
Changing Market Drivers in 2025–2026
The market outlook cannot be explained by lending conditions alone. Broader structural changes are reshaping how property is used and valued across the UK. Remote working has permanently reduced the need for some office space, while the rapid rise of online businesses is altering demand for retail and leisure properties. E-commerce has taken a significant share of consumer spending, pushing vacancy rates higher on high streets and reducing rental values in weaker locations.
A similar pattern can be seen in leisure. Many players prefer the convenience of international non gamstop casinos and other online platforms over travelling to physical venues. Foot traffic in physical casinos is affected as many players opt for convenience, these platforms provide 24/7 online casino access. They also provide much more in services and features, such as live dealer games, tv-game show style games, as well as the slots, poker, and crash gambling games. However, physical casinos maintain value for social interaction, live table games, and experience-driven visits, preserving some foot traffic.
Just as retailers are adapting through click-and-collect and hybrid store concepts, casino operators are balancing land-based properties with digital offerings. The lesson for the property market is that online channels are influencing the viability of physical premises, forcing landlords and investors to rethink use, rental expectations, and long-term strategy.
The UK property market moved into 2025 with a sense of renewed confidence. Price growth of nearly 5% year-on-year reflected stronger demand, while buyers hurried to complete deals ahead of changes to Stamp Duty Land Tax. Lenders widened product availability, and government support measures added further encouragement.
Analysts now expect the market to continue its recovery into 2026, though the pace of growth will likely be steadier and more regionally uneven. Northern England, Scotland, and Wales are expected to lead, while London and the South remain more subdued. At the same time, the commercial sector is undergoing its own adjustments as online businesses and new working patterns alter property demand across retail, office, and industrial spaces.
While residential markets are buoyed by stronger demand and improved lending conditions, the commercial sector is adjusting to an environment where digital-first behaviour reduces reliance on physical premises. This creates a mixed picture: steady growth in housing, yet pressure and reinvention in parts of retail and leisure.
What’s important to understand here is, that these regional differences are not limited to housing. The North also benefits from the strength of industrial and logistics property, where demand for warehousing and distribution space continues to grow in line with e-commerce. By contrast, London’s reliance on high-value retail and office property leaves it more exposed to digital disruption and changing work patterns.
Regional Growth Patterns
Residential growth remains uneven across the UK. Northern cities such as Manchester, Leeds, and Liverpool are expected to see stronger gains, supported by relative affordability and infrastructure investment. Scotland and Wales also show positive momentum, helped by steady demand and lower entry costs for buyers.
In contrast, London and parts of the South face weaker prospects. High prices, stretched affordability, and tougher lending tests are keeping growth muted, with analysts expecting these regions to underperform the national average. Savills and Knight Frank both forecast national house price growth of 3.5 to 5.5% in 2026, with a cumulative increase of 20 to 23% over the next four years.
Commercial Property in Transition
The commercial sector is being reshaped by changing consumer behaviour and business models. Retail has been hit hardest, with e-commerce drawing foot traffic away from physical stores and placing pressure on rental values. Vacancy rates are rising on secondary high streets, while landlords seek to repurpose units into mixed-use developments, leisure, or residential. However, demand is stronger for experience-led retail and prime shopping locations that continue to attract steady footfall.
Office property tells a more mixed story. Secondary offices face higher vacancies and downward rental pressure, while prime locations in London and other key cities are stabilising. Hybrid work has left businesses more selective, favouring high-quality space in central areas but reducing demand for larger footprints overall.
By contrast, industrial and logistics properties are thriving. Warehousing and distribution centres linked to e-commerce remain in high demand, with rents rising and investor appetite strong. Analysts note this sector is outperforming others and will remain a focus for capital through 2026.
Mortgage Affordability and Lending Conditions
Residential demand continues to benefit from improved affordability. The Bank of England is expected to trim the base rate from 4.5% towards 4.25% or below, supporting lower borrowing costs. Lenders have widened access to low deposit products, giving first-time buyers greater opportunities to enter the market. These measures underpin transaction activity and suggest stable conditions through the next year, particularly in regional markets where affordability is stronger.
Investor Sentiment and Market Outlook
Investor confidence is gradually returning. According to RICS and commercial property analysts, the market may be nearing the bottom of its current cycle, with early signs of an upswing in investment activity. Rental and capital value forecasts for 2026 remain modest but positive, with industrial property expected to lead, offices showing moderate growth, and retail slowest to recover.
In the residential sector, regional opportunities are attracting buy-to-let investors and overseas buyers, particularly where yields are higher and capital growth prospects are better than in London. Analysts project long-term growth of around 20% across the UK over the coming years, though outcomes will vary sharply between regions.
