Affordability Improves as the Market Stabilises

Nationwide estimates that mortgage payments for a typical first-time buyer now equate to around 32% of take-home pay. While still slightly above long-term averages of 30%, this marks a meaningful improvement in conditions seen over the past two years, with a peak in 2023 of 38%. This is significant for many, especially first-time buyers who are seeing more offers to tempt them into the market – Santander have a new product which requires just a 2% deposit.   

With earnings continuing to outpace house price inflation and mortgage rates softening from their recent highs – we have the 2 vital ingredients for borrowing, and therefore demand, to slowly gather pace.

The 3^rd Vital Ingredient For Higher Prices – Demand

According to Zoopla, there are 14% more houses on the market in London than a year ago. In the North, the opposite is true – there are between 5% and 7% less properties on the market than a year ago.

This divergence reinforces the extent to which regional affordability and supply have both become the primary drivers of price movements.

Northern regions continue to benefit from relative affordability and sustained rental demand, meaning modest improvements in confidence tend to translate more quickly into price movements.

Affordability constraints remain most acute in Southern markets,  and buyer behaviour continues to be more cautious at higher price points. Supply is higher in the South, relieving any potential upwards pressure on price.

The conditions aren’t as easy going as they once were, pre-pandemic. Buyers are increasingly focused on value and long-term fundamentals rather than short-term price movements, a trend that is particularly evident in the Southern regions.

Industry Sentiment Supports a Measured Recovery

Alongside the data, property professionals are reporting a gradual improvement in market engagement. Industry reaction suggests that January’s modest rise in prices has been accompanied by greater confidence among both buyers and sellers, particularly compared with the subdued conditions seen at the end of last year. Rather than a rush back into the market, the shift has been toward more measured and pragmatic decision-making.

Outlook For The Rest of 2026

The broader economic backdrop remains complex, shaped by geopolitical uncertainty and global market volatility. However, easing inflationary pressures and a more stable interest-rate outlook are helping to remove some of the uncertainty that previously held activity back.

Joshua Walters, Senior Consultant at Find UK Property observes:

“The market appears to be adjusting to a new normal rather than returning to a boom-time – not a bad thing in my view. The boom-times are good while they last but that’s rarely for long. As a property investment solution provider that focuses on passive income, our clients like predictable and steady, so these conditions are actually ideal.”

Expectations for the year ahead point to steady rather than spectacular growth. The conditions for a sharp rebound in 2026 are not yet in place, but neither are the fundamentals consistent with a renewed downturn.

What This Means for Investors

For property investors, especially those focused on the North, January’s data reinforces a clear and increasingly familiar theme: regional outperformance is doing the heavy lifting in the UK market. While Southern markets remain constrained by affordability and rising supply, Northern regions continue to benefit from stronger demand, tighter stock levels, and more accessible price points.

This creates a more supportive environment for steady capital growth alongside resilient rental yields. As mortgage conditions gradually improve and confidence returns in a measured way, the North is likely to remain one of the most compelling areas for investors seeking predictable, long-term returns through income-led investment rather than short-term speculation.