A ‘keep calm and carry on’ approach to business is needed despite inflation being nearly double the government’s target of 2%. 

Following the news inflation hit 3.8% in the last month the “housing market remains in a strong place, and more aspiring buyers than ever are realising that they can get on the ladder sooner” said Rachel Geddes, Strategic Lender Relationship Director at Mortgage Advice Bureau, urging people and businesses to adopt a ‘keep calm and carry on’ approach.

“While inflation holding steady at 3.8% reflects the persistent pressures from political uncertainty and elevated costs, the mortgage market continues to remain resilient. In fact, many don’t realise they’re now in a prime position to get onto the property ladder – especially compared to this time last year, or even six months ago.

“Affordability is improving, and customers are benefiting from higher average borrowing limits and a wave of new, innovative products. First time buyer appetite is strong, with a 9.7% uplift on the number of mortgage applications year-to-date.”

Ahead of the Budget and the next Bank of England base rate decision the economy is in a sensitive phase, said Nathan Emmerson, CEO of Propertymark:

“We have seen inflation trend back upwards over the last twelve months; however, we are thankfully in a much better position than we were only three years ago, when the rate of inflation sat at 11.1%. The Bank of England is still in a challenging position when it comes to making any calls to further reduce the base rate currently. However, there is widespread optimism into the new year that we could see the Monetary Policy Committee consider new dips in the base rate, all of which should help provide additional affordability for many consumers regarding housing.”

While inflation remains above the government’s 2% target, the fact it has remained at 3.8% for three consecutive months is ‘welcome news’ according to John Phillips, CEO of Just Mortgages and Spicerhaart. He added the elephant in the room was the upcoming budget with major tax changes likely to be a feature of this year’s plan.

“We saw the inflationary impact of last year’s Budget as employers and businesses passed on the cost of higher taxation to consumers. A similar impact could amplify cost pressures and keep inflation elevated for longer.

“The main focus for much of the market right now will be breaking out of this holding pattern created by a very late Budget. However the Budget falls, getting it out of the way will definitely be helpful in creating more activity. Despite an uncertain outlook, there are plenty of positives to take in the current climate with movement on rates from different lenders, plenty of money in the market and broad product and criteria options available.”

Will it give the central bank confidence in making a ‘much needed’ rates cut added Phillips.

Meanwhile the Office for National Statistics reported house prices has remained relatively steady, with a 0.8% increase in August. The average UK house price annual inflation was 3.0% in the 12 months to August 2025, down from the revised estimate of 3.2% in the 12 months to July 2025, meaning the average UK house price currently sits at £273,000.

There is evidence of a pre-budget slowdown, said Richard Donnell, executive director at Zoopla, but first time buyers continue to show ‘strong demand.

“Budget uncertainty is leading to a slowdown in sales and demand which will drive a continued slowdown in house price inflation. The increase in first time buyers activity is one reason rental inflation has slowed to the lowest level in almost three years, alongside a 20% increase in the number of homes for rent and growing affordability pressures on renters.”

The good news, said Iain McKenzie, CEO of The Guild of Property Professionals, the overall market fundamentals remain ‘sound.’

“The combination of lower mortgage rates, a wider choice of homes, and price growth running below wage increases is supporting buyer confidence and helping sustain healthy transaction levels.’ 

“Crucially, we’re seeing realistic pricing become a key differentiator: homes priced sensibly are selling, while those that need price reductions are taking three times as long to secure a buyer. The record volume of properties for sale and the largest sales pipeline in over four years point to an active final quarter. While geopolitical uncertainty and the upcoming Autumn Budget may cause some to pause, overall market fundamentals remain sound.

“Looking ahead, we expect house price growth to remain steady through the end of the year, with firmer momentum building into 2026 as wage growth and more flexible lending criteria feed through. This is good news for both movers and first-time buyers – a balanced market benefits everyone.”

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