Closing post
Time to wrap up…
House prices in the UK could rise by as much as 4% next year but getting on the property ladder may become slightly less difficult, according to forecasts from the lender Nationwide.
Robert Gardner, the chief economist at the building society, said prices were likely to increase by 2-4%.
He said:
“We expect housing market activity to strengthen a little further, as affordability improves gradually via income growth outpacing house price growth and a further modest decline in interest rates.”
Nationwide also reported that the North-South house price gap narrowed this year.
Rival lender Halifax predicted a slightly smaller rise, of 1%-3% next year.
And trade body UK Finance forecast a rise in mortgage lending next year, but a drop in transactions.
The predictions came as new data showed first-time buyers are taking out larger mortgages than ever before as rising wages and looser affordability tests allow them to buy properties that were previously beyond their budget.
The UK’s financial watchdog said it would consult on changes to the mortgage market, including simplifying mortgage rules to allow more flexible products that better reflect different working patterns and income levels at various stages of life.
The FCA is aiming to improve advice to help people “confidently plan for later life”, while encouraging the use of AI to help brokers provide “better and faster advice”.
In other news…
The chances of the European trucking industry hitting zero emissions targets are “dire”, an industry body has warned, as it emerged that only a tiny amount of lorries delivering goods in the EU are electric.
The private equity owners of the AA, Britain’s biggest roadside recovery business, are looking for a potential £5bn sale or stock market flotation, while the owners of the rival RAC are targeting a London listing with a similar valuation.
Over on Wall Street, stocks have opened slightly higher as investors brace for a barrage of economic data that could set the course for interest rates next year.
The Dow Jones Industrial Average is up 20 points, or 0.04%, at 48,477.91, while the broader S&P 500 index is flat.
Banks are rallying, lifting the S&P 500 financial sector to an all-time high.
Tomorrow’s delayed US jobs report may give us an indication if America’s labor market is cooling, which could tee up rate cuts in 2026.
Trade body UK Finance has predicted mortgage lending will increase in 2026, and that more homeowners will see their homes repossessed because they can’t meet their repayments.
In its mortgage market forecast for 2026, UK Finance also predicts there will be fewer property transactions next year, predicting:
Overall gross lending rise by four per cent to £300 billion.
10,000 fewer property transactions in 2026 compared to 2025.
A 10 per cent rise in external remortgaging and two per cent rise in Product Transfers.
1.8 million fixed rate mortgages due to come to an end.
A further five per cent fall in arrears.
James Tatch, head of analytics at UK Finance, says:
The mortgage market showed strength in 2025, particularly for house purchases. But even with welcome tweaks to lending regulations this year, affordability is now very tight and this is likely to limit borrowing options for potential buyers in 2026.
“There was expected growth in remortgage activity this year, and with more households coming off their fixed rates next year, we expect to see further growth in 2026.
“Meanwhile, the number of customers in arrears continued to improve as cost and rate pressures eased, and we are now moving towards the historic lows seen in 2022. Although the number of possessions rose, they remain very low by pre-pandemic comparisons. We do expect a small rise next year, but possessions will remain at low volumes.
“As always, help is available for customers who are worried about paying their mortgage. Speak to your lender as early as possible to explore the tailored support options they have available.
Airbnb fined €64m in Spain for advertising unlicensed tourist rental homes
Over in Spain, Airbnb has been fined €64m for advertising unlicensed tourist rental homes.
The Consumer Rights Ministry has announced the penalty as part of a crack down on tourism rentals that use sites such as Airbnb and Booking.com.
Airbnb, which in July withdrew 65,000 listings that the ministry said violated its rules, did not immediately respond to a request for comment. The fine can be appealed in court.
Reuters reports that the fine is equivalent to six times the profit Airbnb gained from the illegal listings, the ministry said in a statement, and is the second largest the ministry has imposed for breaching consumer rights, consumer rights minister Pablo Bustinduy told reporters, saying:
“There are thousands of families living on the edge because of housing, while a few get rich from business models that drive people from their homes.”
Business groups urge parliament to pass Employment Rights Bill
UK business groups are urging MPs to pass the government’s Employment Rights Bill, after new protections against unfair dismissal were watered down.
Six groups representing British companies have written to Peter Kyle, the Secretary of State for Business and Trade, saying “now is the time for Parliament to pass the Bill,” which was blocked by the House of Lords last week.
Although the groups have concerns about parts of the bill, they want to work with the government and trade unions to find “balanced solutions through secondary legislation”, after the Bill has been passed.
The groups – the British Chambers of Commerce, the Chartered Institute of Personnel and Development, the Confederation of British Industry, the Federation of Small Businesses, the Recruitment and Employment Confederation, and Small Business Britain – say:
Business organisations are clear that there remain concerns about many of the powers contained in the Employment Rights Bill.
However, to secure the six month qualifying period for unfair dismissal, and to progress further negotiations on the bill in secondary legislation, we believe it should now be passed.
We have today exchanged correspondence with the Secretary of State for the Department of Business and Trade setting this position out.
We are pleased the Government has agreed to move forward with tripartite discussions on other key elements of secondary legislation. There remain many areas where compromise will need to be found to get the Bill into a workable state.
Late last month, the government ditched its flagship policy to give workers the right to claim unfair dismissal after their first day on the job, in favour of a six month-threshold, as part of deal between business groups and trade union leaders.
Eurozone's industrial recovery gains momentum
Encouraging news from the eurozone: industrial output growth has picked up in the single currency bloc.
Industry expanded by 0.8% on the month after a 0.2% increase in September, data from the EU’s statistics agency Eurostat shows.
This suggests European factories are recovering as trade uncertainty fades, and energy costs fall.
Peter Vanden Houte, ING’s chief economist for the eurozone, says the region’s battered industry is showing signs of life, explaining:
The eurozone’s manufacturing sector has had a rough time since 2022 on the back of high energy prices following the Russian invasion of Ukraine. On top of that, this year has brought additional headwinds, such as the trade war, a strengthening euro and intensifying Chinese competition. However, declining oil and gas prices have offered some relief, and reduced inventories are gradually giving way to increased production.
We expect the recovery in manufacturing to continue in 2026, now that the German government is finally making some progress with the implementation of its higher defence and infrastructure plans. We must also not forget that the remaining money from the EU’s recovery fund will have to be spent in 2026.
EE and Three under investigation for mobile network outages
The telecoms regulator has launched investigations into EE and Three over UK-wide mobile outages that meant customers’ could not make or receive calls, including emergency services.
BT-owned EE, which has around 25 million customers, said that a “software issue” was to blame for the national outage that ran over two days in July.
Separately, Three UK, which has around 10 million customers, has notified Ofcom over an incident that resulted in a UK-wide disruption to call services for one day in June, including the 999 emergency number.
Telecoms operators are legally mandated to report outages to Ofcom above a certain impact threshold.
A spokesman for Ofcom said:
“Our investigations will seek to establish the facts surrounding these incidents, and assess whether there are reasonable grounds to believe that BT and Three have failed to comply with their regulatory obligations.
Mobile operators are required to identify and reduce the risks and prepare for the occurrence of anything that compromises the availability, performance or functionality of their network or service.”
Last year, BT was fined £17.5m over a “catastrophic failure” of the 999 and 112 emergency numbers, which it is responsible for connecting callers to in the UK, which affected 14,000 calls during a 10.5 hour outage.
Halifax: Property prices expected to rise by between 1% and 3% in 2026
We have been blessed with a third house price forecast this morning, this time from Halifax.
Halifax is marginally less optimistic than its rival Nationwide; it predicts property prices expected to rise modestly in 2026, by between 1% and 3%.
Amanda Bryden, head of Halifax Mortgages, cites signs that affordability is improving, saying:
“While affordability remains challenging, the picture has improved compared to recent years, driven by a combination of above-inflation wage growth, lower interest rates and some expansion of eligibility criteria from mortgage lenders.
“For those taking their first steps onto the property ladder, monthly mortgage costs as a share of income are now at their lowest level since 2022, with the rate on a typical two-year first-time buyer mortgage (90% LTV) dropping by roughly 0.8 percentage points over the last year.
“The second half of the year was dominated by speculation about potential tax rises in the run up to the Autumn Budget. While this kept market confidence subdued for a time, both prices and activity broadly held steady.
“Looking ahead to 2026, we expect house prices to rise modestly, by somewhere between 1% to 3%. While wage growth is expected to slow and unemployment may edge higher, lower interest rates and easing inflation should help to gradually improve homebuyers’ purchasing power.
Retail footfall rises as Christmas shopping heats up
UK shoppers cracked on with their Christmas shopping last week, new footfall data shows.
Data provider MRI Software reports that visits to retailers rose by 3.1% week-on-week in the period from Sunday 7 December to Saturday 13 December.
This was mainly driven by a +5% rise in high streets and a +2.2% uplift in shopping centres.
MRI explain:
While declines were recorded across the board on Sunday (-9.7%) and Tuesday (-6.2%), this did little to hamper overall trends. Tuesday’s drop was likely exacerbated by adverse weather conditions across parts of the UK, temporarily discouraging trips.
However, footfall rebounded strongly as conditions improved, with visits jumping by +10.7% on Monday and +11.5% on Thursday, driven largely by activity on the high street. This could suggest the festive events and attractions drawing visitors in as well as festive parties whether they be work or social led.
This is also reflected in Central London footfall remaining +4.2% higher week on week and +7.1% year on year however historic and market towns recorded annual declines of -3.3% and -3%, respectively.
MRI also predict that footfall is likely to keep rising as we approach ‘Super Saturday’ this coming weekend.
Switzerland has lifted its growth outlook for next year, after securing an improved trade deal with the US.
The Swiss government’s panel of economic experts now expects Swiss growth of 1.1% in 2026, up from the 0.9% rate it forecast in October. That’s still below the 1.4% growth rate forecast for 2025.
The State Secretariat for Economic Affairs explains:
“Despite some easing of tensions, uncertainty remains high regarding international economic and trade policy and its macroeconomic impact.
“Should any of these risks materialize, further upward pressure on the Swiss franc would be expected.”
Growth is expected to rise to 1.7% in 2027.
London stock market opens higher
The last full trading week before Christmas has got off to a positive start in the City.
London’s FTSE 100 share index has risen by 47 points, or almost 0.5%, to 9696 points, towards the four-week high touched last Friday.
Luxury fashion group Burberry (+4.1%) are leading the rises, followed by gold producer Endeavour Mining (+3.4%).
Bloomberg: Real price of a London apartment has Sunk 22% in the last decade
Bloomberg have calculated that the real price of a London apartment has fallen by over a fifth in the last ten years.
For the typical London worker, apartment prices are now below nine times their annual earnings, the most affordable level in 12 years, according to Bloomberg’s analysis of Land Registry and official earnings data. In real terms, flats in the capital are 22% cheaper than a decade ago.
London’s wider property market has diverged from the national picture. Overall its home prices have slipped back 15% since 2015 when adjusting for inflation, compared with a 5% gain across the UK.
A series of factors, from Brexit to tax hikes, have reined in a market once seen as overvalued. For apartments, a clampdown on landlords and a post-pandemic preference for bigger houses have also hurt valuations.
New push to help first-time buyers and self-employed to get mortgages
Britain’s financial watchdog is setting out plans today to reform the UK mortgage market to help first-time buyers and the self-employed onto the housing ladder.
The Financial Conduct Authority (FCA) is proposing to improve four areas of the mortgage market – including rule changes to allow lenders to offer ‘more flexible’ mortages.
Having collected feedback, the FCA says there is “wide agreement” that some potential first time buyers could be better served. This includes those who cannot raise a large deposit, do not have family support, are self‑employed, have irregular or contract‑based income, are recovering from a negative life event, have overseas assets and income, or have dealt with a credit impairment, it says.
Those living in tied accommodation, PhD students, carers, long‑term renters and older borrowers as groups who may be underserved by the current housing market, the regulator fears.
Its new mortgage roadmap will look at:
First-time buyers & underserved consumers: Simplifying mortgage rules to allow more flexible products that reflect different working patterns and income levels at different stages of life.
Later-life lending: Reviewing retirement interest-only requirements to make them more accessible. Exploring ways to improve advice to help people confidently plan for later life. Conducting a focused market study to ensure the lifetime mortgage market can meet the changing needs of future customers.
Innovation & disclosure: Encouraging the use of data and technology, such as AI, to help brokers give better and faster advice while keeping a human touch. Looking at ways to make advertising and disclosure rules simpler, so consumers can understand information online more easily.
Protecting vulnerable consumers: Working with partners to support people affected by financial abuse and help those using a mortgage to manage or consolidate debt.
First-time buyers are taking out larger mortgages than ever before as rising wages and looser affordability tests allow them to buy properties that were previously beyond their budget.
The average first-time buyer borrowed £210,800 in the year to September, a record high, according to analysis by Savills, the property agent.
First-time buyers accounted for 20% of all spending in the UK housing market in the 12-month period, which is the highest level since at least 2007, it added. More here.
Rightmove predicts 2% bounce in prices, and a busy Boxing Day
Property portal Rightmove has also predicted house prices will rise next year, as budget uncertainty fades away.
It predicts that the price tag on houses being put up for sale will increase by 2% in 2026, as “buyer affordability is set to improve”, helping to put upward pressure on prices.
Rightmove is now anticipating a bigger-than-usual Boxing Day bounce on its platform, as many of those who paused their plans due to Budget uncertainty join the traditional start of the busier home-moving season.
Colleen Babcock, property expert at Rightmove, says:
“Lower price growth supported buyer affordability and drove activity in the first half of the year, even after the April stamp duty deadline in England. In the second half of 2025, uncertainty caused by rumours of property tax changes in November’s Budget swirled, some from as early as August.
This had an impact on pricing and activity, as sellers tried to entice nervous buyers. The market will soon benefit from the traditional boost in home-moving activity from Boxing Day. Rightmove’s Boxing Day Bounce is an annual event where we see many begin or resume their plans to move after the distraction of Christmas.
With the turkey and trimmings barely off the table, each year we see people heading straight to Rightmove to browse the fresh listings for sale and imagine how different next Christmas could look.”
Updated
North-South house price divide narrowest since 2013
Natiowide also reports that the price gap between houses in the more expensive south and the cheaper north of England has shrunk to a 12-year low this year.
This was partly due to the London housing market lagging behind.
Nationwide explains:
London was the weakest performing region in the first nine months of the year with annual growth averaging 1.3%.
This was part of a wider trend that saw house price growth in the northern regions of England outpacing the southern regions. As a result, the price differential narrowed to its lowest since 2013. The average price of a home in northern regions of England is now almost 58% of that in the southern regions, well above the lows of c48% seen in 2017.
Updated
Introduction: UK house price tipped to rise 2%-4% in 2026
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
With the year almost over, thoughts are lightly turning to what might happen in 2026.
And lender Nationwide is predicting that UK house prices will climb by up to 4% next year, as getting onto the housing ladder becomes slightly less difficult.
In their Outlook for 2026, Nationwide’s chief economist Robert Gardner predicts that lower borrowing costs could help the market in the 12 months ahead, saying:
“Looking ahead, we expect housing market activity to strengthen a little further as affordability improves gradually (as it has been in recent quarters) via income growth outpacing house price growth and a further modest decline in interest rates.
We expect annual house price growth to remain broadly in the 2 to 4% range next year.
The next decline in interest rates could come as early as this Thursday, when the Bank of England is generally expected to lower its key interest rate from 4% to 3.75%.
Gardner suggests that chancellor Rachel Reeves’s new taxes on the top of the property markets are unlikely to have a major impact on prices in 2026 – but new levies on landlords could make it pricier to rent":
“The changes to property taxes announced in the Budget are unlikely to have a significant impact on the market. The high value council tax surcharge is not being introduced until April 2028 and will apply to less than 1% of properties in England and around 3% in London.
The increase in taxes on income from properties may dampen buy-to-let activity further and hold down the supply of new rental properties coming onto the market, which could in turn maintain some upward pressure on private rental growth.”
Looking back over the last year, Gardner reminds us that annual price growth slowed steadily from 4.7% at the end of 2024 to 2.1% in the middle of 2025 and then to 1.8% in November.
This has left prices close to the all-time high recorded in the summer of 2022.
The agenda
11am GMT: Eurozone industrial production report for October
2.30pm GMT: NY Empire State Manufacturing Index for December
