Stabilising house prices and falling mortgage rates are offering renewed hope for first-time buyers, but persistent affordability pressures and property tax barriers continue to impact the wider housing market, according to Propertymark.
As lenders reduce mortgage rates in response to improving market conditions, monthly repayments are becoming more manageable for aspiring homeowners. This easing is helping first-time buyers, many of whom were previously priced out, to reconsider entering the market. Forecasts of modest house price growth in 2026 suggest a shift away from recent volatility, pointing to a more balanced housing market rather than a return to rapid inflation.
However, Propertymark warns that lower mortgage rates alone will not resolve structural barriers. High property prices, rental costs that limit saving, deposit requirements, and the pace of new homebuilding continue to challenge those seeking to buy their first home.
Transaction trends underscore these pressures. In 2021, 1,073,308 properties were exchanged across the UK, dropping to 920,052 in 2025—a 14.3% decline over four years. Temporary property tax support introduced during the pandemic helped stimulate activity at the time, but the removal of these measures has added to ongoing affordability challenges.
In England and Northern Ireland, the nil-rate band for Stamp Duty Land Tax was temporarily raised in 2020–21, reducing upfront costs for buyers. Scotland’s Land and Buildings Transaction Tax and Wales’ Land Transaction Tax saw similar temporary increases.
These adjustments lowered initial outlays, supported higher transaction volumes, and boosted market confidence, demonstrating how targeted tax reform can act as a catalyst for housing market activity. Propertymark notes that higher transaction levels also benefit the wider economy, as home movers spend on furnishings, tradespeople, and professional services such as surveyors and conveyancers.
Rental market
The rental market remains under pressure, with supply struggling to keep pace with demand. Rising rents are being driven by a combination of limited stock, higher mortgage rates in recent years, tax increases, and escalating operating costs for landlords, all of which constrain the availability of rental properties.
Nathan Emerson, CEO of Propertymark, said, “Lower mortgage rates are a positive step and will undoubtedly help many first-time buyers reassess their options. Combined with modest house price growth, this shows the market is finding a more sustainable footing.
“However, affordability pressures remain complex, and property tax thresholds have failed to keep pace with rising house prices and wage growth over the past decade, increasing the tax burden on buyers.
“Propertymark believes reform is needed to create a fairer, more responsive property taxation system across the UK that reduces upfront costs, supports first-time buyers, and improves market mobility. Alongside this, action to boost housing supply and targeted support for those struggling to save for a deposit will be essential if homeownership is to become a realistic option for more people.”
