Drawing on nearly five decades of experience in property investment, Dr. T has outlined ten key forecasts for where the UK property market is likely to be by the end of 2026. Together, they paint a picture of a market that is quietly turning back in favour of property investors, particularly those seeking low-risk, fully passive income.

Below, we break down those forecasts and what they mean for buyers, landlords and investors.

1. Interest rates will fall, but the economy will remain weak

By the end of 2026, inflation is expected to be back under control, with CPI running at around 2 percent. Despite this, the wider UK economy is unlikely to be strong. GDP growth is forecast to remain below 1.5 percent, while unemployment is expected to rise slightly to around 5.2 percent.

As a result, the Bank of England is likely to ease interest rates further. The base rate is forecast to fall to around 3.25 percent from the current 3.75 percent.

This gradual reduction in interest rates is one of the most important drivers of the property market outlook for 2026. Lower rates increase affordability, reduce downside risk on prices, and make property far more attractive relative to cash savings.

2. Housing supply will continue to fall well short of demand

The government’s target of building 1.5 million homes over five years is already proving unrealistic.

In 2025, only around 200,000 homes were built, roughly two-thirds of the annual target. In 2026, completions are expected to fall further to around 190,000 homes, with the majority not being genuinely affordable.

At the same time, the UK population is expected to increase by up to 700,000 people during 2026. That equates to roughly 300,000 new households.

This widening gap between supply and demand creates unavoidable pressure on both rents and property prices.

3. The Renters’ Rights Act will reshape, not destroy, the rental market

The Renters’ Rights Act is designed to improve standards and fairness for tenants, making renting more attractive and secure.

However, it also increases costs, responsibilities and liabilities for landlords. This will push some traditional landlords out of the market.

Rather than reducing rental supply overall, the Act is likely to accelerate a structural shift. Many landlords will move away from active management and become passive investors, renting their properties to professional operators who take on full landlord responsibilities.

In this model, the operating company becomes the acting landlord, while the property owner receives a net, guaranteed rent with no exposure to tenant management or maintenance obligations.

4. Investors will switch away from savings and paper assets into property

As interest rates fall, returns from bank savings will continue to decline. For many investors holding large amounts of cash, this creates a problem.

Property offers a tangible, inflation-resistant asset with reliable income and long-term capital growth. With lower interest rates reducing the risk of price falls, property becomes increasingly attractive.

For many cash investors, switching from savings to property can increase net income by around three times, while also delivering capital appreciation. For this group, property will once again feel like an obvious choice.

5. Rental demand and returns will remain strong

Despite changes in landlord behaviour, the overall number of rental properties is expected to remain broadly stable.

Some landlords will exit, but others will enter the market as passive investors, attracted by stronger yields and lower risk compared to savings or bonds.

Rental demand will continue to rise due to population growth, limited housing supply, and increased desirability of renting. Rents will also be pushed higher by increased landlord costs linked to regulation.

Despite rising rents and costs, net percentage returns for landlords and investors are expected to remain broadly unchanged by the end of 2026.