The UK housing market is showing fresh signs of improvement, particularly for first-time buyers who have struggled over the past few years with high rents and rising borrowing costs. New data from Zoopla reveals that around 40% of homes currently listed for sale are now cheaper to buy with a mortgage than to rent, assuming buyers can provide a 20% deposit.
This represents a major shift compared with last year, when only 25% of homes were more affordable to buy than rent. The change reflects a combination of falling mortgage rates, easing affordability checks by lenders, and steady growth in wages. Together, these factors are making home ownership more realistic for many households who previously felt locked out of the market.
One of the main drivers behind this improvement is the drop in mortgage rates. New fixed-rate mortgage deals are now at their lowest level in four years. Both two-year and five-year fixed products are being offered below 4% for the first time since 2022. Although rates are not expected to fall sharply from here, this reduction has already boosted buyer confidence and encouraged more people to begin house-hunting.
Lenders have also adjusted how they assess borrowers. A year ago, banks were stress-testing mortgage applicants at interest rates of around 8.5%. Today, that figure has fallen to roughly 6.5%. This change means many buyers can now borrow more than before, allowing them to compete more easily with rental costs and access a wider range of properties.
Wage growth has provided further support. Over the past three years, average earnings have increased faster than house prices. This has helped to restore some of the purchasing power that was lost when interest rates rose sharply in 2023 and 2024. For many households, this means mortgage payments are becoming more manageable relative to income.
The improvement in affordability is not evenly spread across the country. Northern England and Scotland are seeing the strongest gains. In the North East and Scotland, more than half of homes for sale are now cheaper to buy than to rent. The North West is close behind. These areas typically have lower house prices and fewer additional costs, making them more attractive for buyers with limited deposits.
In contrast, London and parts of the Midlands remain more challenging. Fewer than 40% of homes in these regions are cheaper to buy than rent. High property prices and stamp duty costs continue to make home ownership difficult, particularly for younger buyers without family financial support.
Market activity is also picking up. February is on track to record the highest number of new property listings for the month in the past decade. There are now around 6% more homes on the market than at the same point last year. This rise in supply is giving buyers more choice and helping to prevent sharp price increases.
Sales agreed have reached one of the strongest February levels seen in the last ten years, although they remain slightly below the very strong start recorded in early 2025. Even so, the data suggests renewed momentum across the housing market after a difficult period of uncertainty.
Despite this higher activity, house price growth remains modest. Across the UK, prices rose by 1.3% in the 12 months to January, compared with 1.8% the year before. Northern Ireland saw the fastest annual growth at 8%, followed by the North West at 3.3%, Scotland at 2.8%, and the North East at 2.5%.
Among major cities, Liverpool and Glasgow recorded the strongest increases, with prices rising by about 4% and 3% respectively. Manchester and Sheffield followed with gains of around 2.9% and 2.6%. Newcastle, Leeds, Birmingham, Edinburgh and Cardiff also posted steady growth.
However, some cities saw prices fall slightly. London, Southampton, Portsmouth, Cambridge and Bournemouth all recorded small declines. In much of southern England, prices are broadly flat, though the sharper drops seen in late 2025 now appear to be easing.
Richard Donnell, executive director at Zoopla, said the current market conditions point to greater stability. He explained that modest house price growth alongside rising activity is good news for both buyers and sellers. The increase in new listings shows that many households now feel more confident about moving home.
He also noted that lower mortgage rates and improved affordability could make this one of the best periods to buy a home in recent years, especially for first-time buyers. With more properties available at prices similar to renting, buyers now have stronger negotiating power and more options to choose from.
Looking ahead, Zoopla expects house prices to continue rising slowly throughout 2026. This should support healthy levels of sales while still allowing for regional differences. Sellers are being advised to price their homes realistically and seek guidance from local estate agents to attract serious buyers.
Overall, falling mortgage rates, steady wage growth and an increase in homes for sale are reshaping the UK housing market. While challenges remain in high-cost areas such as London, many regions are becoming more accessible for people hoping to buy their first home.
For first-time buyers in particular, the balance is shifting. Buying is no longer automatically more expensive than renting in large parts of the country. With careful planning and the right financial advice, 2026 could prove to be one of the most encouraging years in recent times for those trying to step onto the property ladder.
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