Oxford Economics: Expect Another Year of Flat Prices and Low Sales

Oxford Economics has forecast that the UK housing market's current state of low transaction volumes and stagnant prices will continue next year, offering little comfort to those hoping for a decisive turn in either direction. The forecast, as reported by Oxford Economics, suggests the market is settling into a prolonged period of inertia rather than moving towards either a meaningful recovery or a sharp correction.

For professional investors and landlords, this is a significant signal. A market characterised by low transactions and flat prices is fundamentally different from one in either growth or decline, and it demands a different strategy. When prices are static, capital appreciation cannot be relied upon to deliver returns, which pushes the emphasis firmly back onto income, specifically rental yield, cash flow discipline and operational efficiency. Investors who have spent the past decade leaning on price growth as a core part of their investment thesis will need to recalibrate their expectations if this pattern persists as Oxford Economics suggests.

Low transaction volumes also have a knock-on effect that often gets overlooked: they constrain liquidity across the entire market. Fewer sales mean longer timeframes to exit positions, more difficulty in accurately pricing assets, and a tighter supply of comparable sales data for valuers and lenders to work from. This matters enormously for buy-to-let landlords considering whether to sell up amid ongoing regulatory and tax pressures, as a thin market makes it harder to achieve a timely sale at a fair price. It also matters for developers, who rely on a healthy pace of transactions to de-risk schemes and recycle capital into new sites.

Regionally, the picture is unlikely to be uniform even within a nationally stagnant market. Cities such as Manchester, Birmingham, Leeds and Liverpool have in recent years attracted investor interest partly on the premise of stronger relative growth prospects compared with London and the South East. A stagnant national backdrop as forecast by Oxford Economics does not necessarily mean every regional market behaves identically. Areas with structural supply constraints or stronger local employment stories, potentially including parts of Newcastle and commuter hotspots around Surrey, may still see pockets of resilience, even as the aggregate picture remains flat. Investors should treat this forecast as a baseline expectation for the market overall, not as a uniform prediction for every postcode.

For first-time buyers, a continuation of stagnant prices is, on balance, not unwelcome news, since it removes the pressure of a rapidly appreciating market that can price buyers out while they save for a deposit. However, low transaction volumes often reflect broader constraints, including affordability pressures and mortgage conditions, that affect buyers just as much as sellers. A market that is not falling but also not moving freely can leave first-time buyers stuck competing for a smaller pool of available stock, even if that stock is not getting more expensive.

Looking ahead to the next six to twelve months, PropertyNews analysis suggests this environment of low transactions and stagnant prices, if it plays out as Oxford Economics forecasts, will reward patience and operational focus over speculative positioning. Commercial investors and developers should expect financing and planning decisions to be judged less on anticipated capital uplift and more on the fundamentals of income generation and build cost control. Landlords should prioritise rental income optimisation and portfolio efficiency rather than banking on price appreciation to improve their position. The clearest conclusion from this forecast is that the UK housing market is not poised for a breakout in either direction next year, and participants who plan accordingly, rather than waiting for a shift that this forecast suggests is unlikely to arrive, will be best placed to navigate the period ahead.