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Lingering fiscal concerns and possible tax rises in the Budget may weigh on house price growth

Possible tax rises in the Budget on 26th November risk further restraining housing activity next year. And while we think that Bank Rate will fall from 4.00% now to 3.00% in 2026, rather than to the low of 3.50% priced into the financial markets, lingering fiscal concerns suggest gilt yields and therefore mortgage rates may provide a smaller boost to house prices next year too. That suggests the risks to our above-consensus forecast for house prices to rise by 5.0% in the year to Q4 2026 lie to the downside.