Bricks and mortar are not always a sure-fire winner.
From January 2016 to January 2026, did house prices grow faster than inflation?
Nationwide Building Society reports that the average home price in the UK was £196,829 in January 2016. Fast forward ten years, and that figure climbed to £270,873, marking a 37.6% increase. During that same timeframe, the Consumer Prices Index (CPI) rose by 40.2%.
If these figures have taken you by surprise, it’s worth considering how the post-Covid-19 housing boom might have colored your memory, overshadowing the sluggish period that followed. Between January 2023 and now, the average house price saw a modest increase of 4.9%, in contrast to the CPI’s rise of 10.4%.
Interestingly, the recent slowdown in house price growth can be attributed to broader inflationary trends. One significant factor affecting house prices has been the Bank of England’s decision to raise interest rates to combat inflation, which soared to over 11% in October 2022. Up until June 2022, the Bank’s rate was a mere 1%. For those with the impending end of a five-year fixed-rate mortgage, it’s clear that the prevailing interest rate environment—now complicated by the conflict in Iran—has made borrowing much more costly compared to five years ago.
While the stabilization of house prices and recent reductions in mortgage rates have provided some relief for first-time homebuyers, it hasn’t been favorable for buy-to-let investors. According to Zoopla, at the beginning of the year, inquiries per rental property hit their lowest point since 2019, down by 20% from January 2025. This decline in demand has led to a slowdown in rental growth, plummeting from 7.8% annual growth in January 2025 to just 3.1% a year later, based on data from the Office for National Statistics (ONS). Furthermore, in England, buy-to-let investors are gearing up for the changes brought about by the Renters’ Rights Act, which will eliminate no-fault evictions (commonly known as ‘section 21 orders’) starting May 1, 2026.
Overall, purchasing and owning a home generally remains a sound investment choice, but it’s wise to avoid relying on it as your sole investment strategy.
Buying and owning your own home generally remains a sensible move, but be wary of treating it as the only investment you need to make.
Read more on private rent and house prices from the ONS here.