Static February house prices indicate trouble ahead for the market, says RSM UK
Today’s house price index figures suggest challenges ahead for the UK housing market, says RSM UK, with static growth in February highlighting pre-existing weakness in the market before the onset of the Iran war.
The data shows average UK house prices rose 1.2% in the year to February 2026. The average price of a property in the UK in February 2026 was valued at £268,000, the same as January 2026.
Stacy Eden, Partner and National Head of Real Estate at leading audit, tax and consulting firm RSM UK, comments: “Today’s house price index figures show a sustained pattern of static growth over the last three years, a concerning picture given wage inflation over that period. This places the market in a challenging position for navigating the year ahead, with mortgage rates on the rise and the latest inflation figures at 3.3%.
“With UK economic growth expected to be under 1% for 2026, and slowing wage growth being eaten away by inflation, it is unsurprising that buyer demand is waning, and concerns over the interest rate outlook are rising. Mortgage approvals for house purchases are also below average, according to the Bank of England.
“Following today’s inflation figures of 3.3% and expected rises in the future driven by the conflict in the Middle East, the concern is house prices will continue to edge downwards during 2026.
“The situation in London is particularly concerning. With a monthly fall of 1.9% and an annual fall of 3.3%, London is most impacted by the high levels of Stamp Duty Land Tax (SDLT) and static real wages due to its higher house prices. London is also a more international market compared to other UK regions, and therefore more sensitive to challenges damaging international investment such as high levels of taxation, high regulation, and UK economic volatility. The mansion tax on properties worth over £2m also disproportionally affects London.
“London also experienced the lowest rental growth to March 2026 at 1.7% compared to a UK average of 3.6%.
“Barriers to sector growth are also having a significant impact on development viability, with our recent Real Estate 360 survey* finding that concerns around the cost of development, including regulatory costs and planning delays, are making housing development less viable. The situation is continuing to deteriorate and ensuring developments are viable will remain a major challenge, particularly as a fall in house prices remains a possibility.
“Whilst the long-term impact of the recent geopolitical volatility remains to be seen, shorter-term pressures are expected to persist in the coming months, increasing desire across the market for much-needed measures to restimulate the market, such as Stamp Duty reforms, or even further government support for first time buyers.”