House prices in the UK could grow by as much as 4% next year but getting on the property ladder may become slightly less difficult, according to forecasts from the lender Nationwide.

Robert Gardner, the chief economist at the building society, said prices are expected to rise somewhere between 2% and 4% next year.

“We expect housing market activity to strengthen a little further as affordability improves gradually via income growth outpacing house price growth and a further modest decline in interest rates,” he said.

Separately, the City watchdog announced plans on Monday to help first-time buyers and self-employed people to get on the property ladder.

Average UK house prices stood at an average of £272,998 in November, Nationwide found. A rise of 4% next year could take the average to £283,918.

The Bank of England is widely expected to cut interest rates by a quarter of a percentage point to 3.75% when it announces its latest decision on Thursday.

Falling interest rates have helped to support the property market this year, Nationwide found, though annual house price growth slowed steadily from 4.7% at the end of 2024 to 2.1% in the middle of 2025, and then to 1.8% in November.

Separate estimates from the property portal Rightmove have also suggested that house prices will rise by 2% in 2026.

Matt Smith, a mortgage expert at Rightmove, said home-movers will start 2026 looking at cheaper average mortgage rates compared with this year.

“Those who are seeing slightly lower house prices in their area compared to last year and may have also had an end-of-year pay rise, will see their affordability improved further,” he said.

“Many home-movers will also see that the amount that they can borrow has increased, as lender have been rolling out the loan-to-income and stress rate changes that were permitted by the regulator earlier this year.”

Mortgage lenders typically do not lend more than 4.5 times a borrower’s income. They also usually consider whether someone could afford repayments if interest rates rise, in checks known as “stress tests”.

However, earlier this year the City watchdog, the Financial Conduct Authority, said the way some lenders were conducting their stress testing “may be unduly restricting access to otherwise affordable mortgages”.

Since then, many lenders have reduced the interest rate at which they stress test borrowers.

Separately, on Monday the FCA said it would consult on reforms to the mortgage market including simplifying mortgage rules to allow more flexible products that reflect different working patterns and income levels at different stages of life.

It also hopes to improve advice for people “confidently plan for later life”, as well as encouraging the use of AI to help brokers to give “better and faster advice”.

Looser rules on stress tests come as mortgage rates are broadly falling across the market. The average two-year fix rate stood at 4.84% and a five-year fix at 4.91% as of the end of last week, according to the analyst Moneyfacts.

Rising wages and looser affordability tests have also led to first-time buyers taking out larger mortgages than ever. The average first-time buyer borrowed £210,800 in the year to September, a record high, according to the property agent Savills.

Nationwide said that the price differential between homes in the north of England and those in the south was at its lowest since 2013, with the latter dragged down by “weak” growth in London.

The average price of a home in northern regions of England is now almost 58% of that in the southern regions, comfortably above the lows of about 48% in 2017, Nationwide said.