Is Now a Good Time to Buy a House? Cheaper on Pay, Dearer to Borrow
Whether now is a good time to buy a house depends on which question you are asking. Against wages, an English home is cheaper than a year ago, because pay rose 3.5% while prices rose 1.1%. Against a mortgage, it is dearer, because borrowing costs have risen far more than prices have eased. This article works the October 2026 price, rent, inflation and approvals data through for buyers, movers and landlords. Mortgage One is a whole of market mortgage adviser helping buyers and landlords test whether today's prices and rates work on their own income.
For a free initial consultation that runs today's prices and rates against your deposit and income, call 01202 155992 or contact Mortgage One.
Is now a good time to buy a house in the UK?
For a buyer with a deposit saved and a secure income, yes, on one condition: the purchase has to work at today's mortgage rate, not the rate you hope arrives later. England's average house price rose 1.1% in the year to July 2026 while regular pay rose 3.5%, so prices are easing against earnings while mortgage payments stay high.
The reason the question has no single answer is that the price of a home and the cost of financing it have come apart. The average English home cost £293,000 in July 2026 according to the ONS, up £3,000 on a year earlier and growing more slowly than in June, when the annual rate was 1.2%. Consumer Prices Index inflation reached 3.1% in August, up from 2.9% in July, so in real terms the average house is worth roughly two percentage points less than it was a year ago. That is good news for a buyer measuring the price against their salary. It is irrelevant to the lender, who measures the monthly payment against that salary instead, and the payment is set by a rate the Bank of England has held at 3.75% since December 2025. Our UK interest rate projection tracks where markets expect that rate to go after the 17 September hold and ahead of the 5 November decision.
Asking whether it is a good time to buy a house in the UK as a national question therefore misses the point. The national average blends a London market that has already repriced with northern and Midlands markets where prices are still rising faster than pay. The useful version of the question is local and personal: has the property you want already come down against your income, and does the loan you need pass affordability at a rate near 4.6%? Those are the two numbers this article works through.
House prices are rising more slowly than pay and inflation
England's average house price rose 1.1% in the year to July 2026 against regular pay growth of 3.5% and CPI inflation of 3.1%. On both measures housing is getting cheaper in relative terms, and the UK house price to income ratio has been easing as wage growth has outrun price growth since 2022.
This is the slow correction almost nobody notices, because the headline price keeps edging up. A homeowner looking at £293,000 against £290,000 a year earlier feels wealthier. Measured against what the same money buys, the house has lost ground for a third year, and measured against a pay packet that grew 3.5%, it takes fewer months of salary to buy than it did. Real house prices in the UK fall whenever inflation outruns price growth, which has been the pattern for most of the period since 2022 without a single dramatic monthly drop in the national index, and that is exactly why the buyers who waited for a crash are still waiting. Our coverage of UK house prices falling on the Nationwide index earlier this year covers the point at which annual growth first dipped, and the ONS series has now confirmed the slowdown at a national level.
The regional spread matters more than the average. London prices fell over the year while rents rose, and our London house prices falling article sets out the borough figures. Outside the capital the picture is closer to flat in real terms than to falling. For a mover the arithmetic is roughly neutral, because the sale and the purchase sit in the same market. For a first-time buyer saving while renting, the price is coming towards the deposit at about the pace of a pay rise, which is slow but real, and our first-time buyer mortgage guide covers what each deposit band opens up once the numbers meet.
Why cheaper against wages does not mean cheaper to finance
A 75% mortgage on the average English home is £219,750, and at the 4.60% effective rate on new lending recorded by the Bank of England for August 2026 the 25-year repayment is about £1,234 a month. The same loan at the 2% rates of 2021 cost about £931. The price fell against pay, and the payment rose by a third.
That gap is the whole answer to why buying feels harder when the data says housing is cheaper. The deposit on £293,000 at 75% loan to value is £73,250, which has barely moved. The loan it leaves behind has to pass a lender's affordability model at a stressed rate above the pay rate, and on a standard 4.5 times income multiple £219,750 needs a gross income of just under £49,000. A lender stretching to 5.5 times brings that down to just under £40,000, which is the difference between a sole applicant on an average salary qualifying and not qualifying. Our page on how much you can borrow explains which lenders stretch, on what conditions, and why a five-year fix often passes affordability where a two-year fix fails.
The effective rate on new mortgages rose to 4.60% in August from 4.45% in July, so financing got dearer in a single month by more than prices moved in a year. Fixed rates are priced from swap rates rather than from Bank Rate, and lenders repriced upwards in September before the Bank met. Our analysis of whether mortgage rates are going up names the lenders that moved and what a quarter point adds to a typical payment. For a buyer this reverses the usual logic. In a market where prices are flat and rates are the variable, the saving comes from the lender and the product choice, not from waiting for the seller to blink.
What falling mortgage approvals say about the next six months
Mortgage approvals for house purchase fell to 54,900 in August 2026 from 55,900 in July, according to the Bank of England, and HMRC recorded 95,220 seasonally adjusted residential transactions in August, 1% below July and 2% below August 2025. Approvals lead completions by two to four months, so a thinner sales pipeline runs into the new year.
Approvals are the best forward indicator the market has. They measure borrowers who passed affordability and had an offer issued, which is the stage most buyers who drop out never reach. A falling number means fewer financed buyers competing for each property in the months ahead, and that has two practical effects. Sellers who need to move accept more negotiation, and surveyors start to see agreed prices below the comparables of three months earlier, which produces down-valuations on the purchases that do proceed.
Remortgage approvals also eased, to 34,000 from 34,600, at a time when the effective rate on new borrowing was rising. Borrowers coming off fixes are either taking product transfers, which do not show in that series, or sitting on a reversion rate while they wait. Neither is free. Our remortgaging guide weighs a product transfer against a full remortgage on total cost, and in a month when a new lender's affordability test is the obstacle the retention deal is often the only route that keeps the rate workable. The labour market is the risk sitting behind all of this: unemployment was 4.9% in the three months to July, up 0.2 points on a year earlier, and a market with weaker employment, 3.1% inflation and a 4.6% mortgage rate is one where the low to middle of the price range can become unaffordable for the buyers who sustain it.
If your current fixed deal ends within the next six months and you want to know whether a product transfer or a new lender produces the lower payment, call 01202 155992 or contact Mortgage One.
What rising rents mean for tenants saving and landlords buying
The average rent in England reached £1,459 a month in August 2026, up 4.0% on a year earlier and accelerating from 3.8% in July, while the UK average rent was £1,400. On the average English home that rent is a gross yield of just under 6%, which clears a 125% rental cover test at a 5.5% stress rate and sits at the margin of a 145% test.
Rising rents cut both ways, and they cut hardest for the tenant trying to save a deposit. Rent growing at 4.0% while pay grows at 3.5% means a smaller share of income reaches the savings account each month, so the deposit gap closes more slowly even as the price edges towards it. That is the mechanism that keeps would-be first-time buyers renting in a market where the data says homes are cheaper. For anyone in that position the deposit question comes before the price question, and our loan to value calculator shows which lending band a given deposit reaches on a given price.
For a landlord the same 4.0% improves the arithmetic. On £293,000 the annual rent of £17,508 is a 5.98% gross yield, and against a £219,750 loan stress tested at 5.5% the rent covers the stressed interest 1.45 times. A limited company or basic rate borrower tested at 125% passes with room to spare. A higher rate taxpayer in personal name tested at 145% is at the margin, which is where lender choice and the stress rate decide the case. Our buy-to-let rental stress test calculator runs that test at any rent, price and stress rate. A stronger rental market does not make every property a sound purchase, and the supply side explains part of the rent growth: our report on London landlords selling up shows the stock leaving the market, which is lifting rents for the landlords who stay.
Buy now or wait: the three numbers that settle it for your case
Three numbers decide whether now is a good time to buy for you: the price of the property against your income, the monthly payment at today's rate against your budget, and the rent you would pay while waiting. If the first two work and the third is rising at 4.0%, waiting has a measurable cost and no guaranteed reward.
Waiting for a price fall is the weakest of the three positions in the current data. National prices are not falling in cash terms, they are rising at 1.1%, and the real-terms erosion that makes housing cheaper against pay arrives at a pace that is nearly invisible month to month. A buyer who waits a year for a 2% real-terms improvement pays twelve months of rent at £1,459 for it, which on the average English home is more than £17,500. Set against a £73,250 deposit that is a quarter of the deposit spent on waiting. Stamp duty does not move with the wait either, and our stamp duty calculator gives the figure for any price and buyer status so that cost sits in the budget from the start.
Waiting for a rate fall is a bet against the market rather than against the seller. Market pricing in early October 2026 points to Bank Rate rising rather than falling over the next year, and the Bank's own survey of expectations points the other way, so the honest position is that nobody knows. What a buyer can control is the product: a five-year fix removes the stress test at most lenders and locks the payment through the period of uncertainty, while a two-year fix keeps the option to reprice if rates do fall. A whole of market mortgage broker reads the spread between lenders daily, and in a month when the effective rate moved 0.15 points that spread is where the saving sits. The right time to buy is when the property, the payment and the deposit line up on your own figures, and the October 2026 data says that for a buyer who has done that work, the market is giving more room to negotiate than it has for several years.
Figures as of 9 October 2026, London.
To have your deposit, income and target price tested against live lender affordability before you make an offer, call 01202 155992 or contact Mortgage One.
Back to House Price and Affordability Trends
The information provided in this article is for general guidance only and does not constitute personal or regulated financial advice. If you'd like to understand what these moves could mean for you, speak to Mortgage One. We can explain your options and timings based on your specific circumstances.
FAQs
1. Will 2026 be a good year to buy a house in the UK?
For buyers who can finance a purchase at current rates, 2026 has offered flat to slowly falling prices in real terms, less competition as mortgage approvals eased to 54,900 in August, and more room to negotiate than in 2021 or 2022. It has not offered cheap borrowing. Whether it is a good year for you depends on whether the payment at a rate near 4.6% fits your income, not on the national price index.
2. Will UK house prices fall in the next 5 years?
No forecaster can know. The current ONS data shows England prices rising 1.1% a year while inflation runs at 3.1% and pay at 3.5%, so prices are falling in real terms without falling in cash terms. If that pattern persists, housing keeps getting cheaper against wages gradually rather than through a crash. A cash-terms fall would normally need forced sellers at scale, which rising unemployment could produce but which the approvals and transactions data does not yet show.
3. Is it a good time to buy a house in the UK if rents keep rising?
Rising rents strengthen the case for buying where the purchase passes affordability, because the alternative to buying is getting dearer at 4.0% a year while the cost of owning is set by a fixed rate for the term you choose. Where the purchase does not pass affordability, rising rents make saving the deposit slower, and the practical route is usually a higher income multiple lender, a second applicant or a longer term rather than waiting for prices to fall.
4. Should I wait for mortgage rates to fall before buying?
Markets in early October 2026 price Bank Rate rising rather than falling over the next year, and lenders raised fixed rates in September before the Bank of England met. A fall is possible but is not the central expectation. A buyer who wants protection against both outcomes can take a five-year fix, which removes the affordability stress test at most lenders, or a two-year fix that keeps the option to reprice sooner.
5. Is 3 months a long time for a house to be on the market?
In the current market, yes. With approvals falling and transactions 2% below a year earlier, a property unsold after three months has usually been priced on comparables from a stronger period. That is a negotiating position for a buyer, provided the surveyor's valuation supports the price agreed. A lower agreed price also lowers the loan, which can move the mortgage into a cheaper loan-to-value band.
6. What is the 2% rule for property?
The 2% rule is a US rule of thumb that monthly rent should equal 2% of the purchase price, which almost no UK property achieves. The UK test that matters is the lender's rental cover: the rent must cover the mortgage interest at a stressed rate by 125% to 145% depending on your tax status. On the average English home, a rent of £1,459 against a 75% loan stress tested at 5.5% covers the interest 1.45 times.
7. Does a mortgage broker help decide whether now is a good time to buy?
A broker cannot tell you where prices or rates go next, and should not try. What a whole of market adviser does is turn the question into numbers you can act on: which lenders pass your income at the loan you need, whether a five-year fix removes the stress test, and what the payment is at today's rate rather than a hoped-for one. Mortgage One does that assessment before any application is submitted, and the initial consultation is free.