Welsh Housing Market Forecast for 2026

Wyn Williams - Partner and Head of Residential Conveyancing, Harding Evans

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As 2026 gets into full swing, the residential property market is expected to remain active, resilient, and shaped by a combination of improving financial conditions, ongoing supply constraints, and political uncertainty.

While challenges remain, the overall outlook suggests a market that continues to function at pace rather than one entering a period of contraction. Wyn Williams, Partner and Head of Residential Conveyancing at Harding Evans, takes a closer look.

One of the most significant influences on the 2026 market is the trajectory of interest rates. Following sustained increases from 2022 onwards, which raised borrowing costs and affordability pressures, interest rates are now trending downward.

While the previous rate rises did not materially slow activity across much of the Welsh market, the easing of rates is expected to make mortgages more attractive once again. Improved affordability, coupled with greater certainty around future repayments, is likely to bring more buyers back into the market, particularly first-time buyers and those looking to move up the housing ladder.

As a result, transaction levels are forecast to increase, making the market busier overall. Pent-up demand from households that delayed moves during periods of higher borrowing costs is expected to feed into this renewed activity.

Importantly, the resilience shown during the higher-rate environment suggests that demand fundamentals in Wales remain robust, underpinned by relative affordability compared to other parts of the UK, lifestyle appeal, and continued demand for family housing.

However, political considerations may introduce a degree of hesitancy as the Welsh Government election approaches.

Elections typically create uncertainty, particularly where housing policy and taxation are concerned. Buyers and sellers alike may adopt a cautious “wait and see” approach in the months leading up to the vote, especially in relation to Land Transaction Tax (LTT).

Speculation around potential changes to LTT thresholds or rates could influence transaction timing, with some purchasers accelerating decisions to avoid possible increases, while others pause until greater clarity emerges.

The prospect of a change in government adds another layer of uncertainty. If a new party were to replace Labour, there is potential for meaningful reform of property taxation in Wales.

LTT, which has already diverged from Stamp Duty Land Tax in England, could be further adjusted to reflect new political priorities.

Any such changes would have a direct impact on market sentiment, particularly at higher price points.

In this context, ongoing discussion around the introduction of a so-called “mansion tax” in Wales remains relevant.

While details remain speculative, the possibility of additional taxation on higher-value homes could influence buyer behaviour, particularly among discretionary movers and downsizers.

High-end markets may experience some softening if increased tax burdens are introduced, although strong demand for premium rural and coastal properties could offset this to some degree.

Despite these uncertainties, one factor remains constant: a persistent shortage of housing stock. Supply constraints continue to underpin prices across much of Wales.

New housing delivery has not kept pace with demand, and existing homeowners are often reluctant to sell without securing a suitable onward purchase.

This imbalance between supply and demand is expected to remain a defining feature of the 2026 market, providing continued support for property values even as affordability pressures fluctuate.

As a result, while price growth may be modest rather than rapid, widespread price falls are not anticipated. Instead, the market is likely to see steady pricing, with strong competition for well-presented, correctly priced homes in desirable locations.

There is also a huge opportunity in Wales to be bold and change the process of buying and selling a property, with the industry already making a concerted effort to improve transaction efficiency.

One notable trend is the increasing emphasis on providing more comprehensive information upfront, before a sale is agreed to speed up the process.

This could be taken further. If a seller instructed a conveyancing solicitor when the property was listed, rather than waiting for it to sell, it would ensure that all the paperwork could be prepared and good to go as soon as an offer is accepted.

Not only would that speed the transaction up, but it would also demonstrate that the vendor is serious about selling.

In summary, the Welsh housing market in 2026 is expected to remain busy and resilient.

Falling interest rates should stimulate demand, supply shortages will continue to support prices, and industry-led improvements may enhance transaction efficiency.

While political uncertainty around the Welsh Government election, LTT reform, and potential new taxes may cause short-term caution, these factors are unlikely to derail the market altogether.

Instead, Wales looks set to enter 2026 with a housing sector that is active, competitive, and adapting to an evolving policy and economic landscape.