Lower mortgage rates and tight supply to boost prices

We suspect house prices will rise only gradually over the rest of 2026 and end up around 1.5% higher in Q4 2026 than a year earlier. But our view that Bank Rate, and therefore mortgage rates, will fall further than most expect next year explains why we think house prices will rise by an above-consensus 3.5% in the year to Q4 2027. Despite his big pledge, we doubt Burnham will be able to raise council home building to “post-war” levels. So we’re not expecting a big increase in the supply of properties for social rent to offset a further tightening in supply of private rental properties, at least in the near term. Coupled with a recovery in demand over the next few years, we suspect this will mean market rents growth accelerates from 2.1% in April to about 2.5% in 2026 overall and to around 3.5% in both 2027 and 2028.

We'll be answering your questions on what Burnham means for the economy, housing and financial markets in a 20-minute online briefing at 2pm BST today. (Register here.)