{"id":6107276,"date":"2026-02-23T19:25:44","date_gmt":"2026-02-23T18:25:44","guid":{"rendered":"https:\/\/www.buyassociationgroup.com\/en-gb\/?p=6107276"},"modified":"2026-02-23T19:25:44","modified_gmt":"2026-02-23T18:25:44","slug":"how-does-property-investment-stack-up-in-2026","status":"publish","type":"post","link":"https:\/\/www.buyassociationgroup.com\/en-gb\/news\/how-does-property-investment-stack-up-in-2026\/","title":{"rendered":"How does property investment stack up in 2026?"},"content":{"rendered":"

After several years of high interest rates narrowing choices, the investment outlook is finally changing.<\/h2>\n

The Bank of England has cut its base rate six times since August 2024, which has fallen to 3.75%. The resulting reduction in borrowing costs means many investors are now rethinking where to put their money, whether that’s in cash savings, bonds, shares or property – and how they fit with their different goals and strategies.<\/p>\n

Below is an overview of the investment landscape in 2026, focusing on what matters most: income, growth and risk and where property fits into that mix.<\/p>\n

The big picture<\/h2>\n

Cash savings<\/strong><\/h3>\n

Cash accounts performed well when interest rates were high, with the best easy-access deals briefly reaching around 4\u20135% at peak rate levels. As rates have fallen, those headline returns are coming down with them. Cash remains low risk and easy to access, but with inflation running at around 3\u20134%, the real value of money can shrink over time.<\/p>\n

Bonds (gilts and corporate bonds)<\/strong><\/h3>\n

UK government bonds – known as gilts – have become more attractive again. Ten-year gilts have been yielding roughly 4.3\u20134.4%, giving investors a level of income not seen since interest rates were near zero.<\/p>\n

Corporate bonds usually pay more – often in the 5\u20136% range – because investors take on additional risk if companies struggle financially. In simple terms:<\/p>\n

Government bonds = lower risk, steadier income<\/p>\n

Corporate bonds = higher income, more risk<\/p>\n

Equities (shares)<\/strong><\/h3>\n

Shares delivered strong returns in 2025, but it was a year that was also marked by periods of volatility. The S&P 500 returned roughly 17\u201318% overall, although there was a sharp fall in spring before markets later recovered.<\/p>\n

What those headline figures don’t show is where the gains actually came from. Around 40% of the index’s gains came from the technology sector alone \u2014 highlighting how concentrated returns have become. That concentration is the key question heading into 2026. How much of the market’s momentum depends on continued confidence in technology and AI? The Bank of England has examined the potential financial-stability consequences of a sharp fall in AI-related valuations, and investors have warned that the AI boom could be moving into a more dangerous phase if spending and expectations don’t translate into actual returns.<\/p>\n

The UK market also surprised many investors last year. The FTSE 100 rose around 21% – its best year since 2009 – helped by the strength of sectors such as banking, mining and energy. Because many FTSE 100 companies earn revenues globally, however, international conditions still matter more than domestic headlines.<\/p>\n

Property: regional focus<\/strong><\/h3>\n

On a national basis, house price growth last year was relatively modest. The UK House Price Index (the official index produced by ONS and HM Land Registry) showed average prices rising about 2.4% to December 2025, taking the average price to around \u00a3270,000.<\/p>\n

The UK’s property markets, however, are comprised of a series of micro-markets, with those headline figures hiding some considerable regional variations.<\/p>\n

Earlier in 2025, the North West recorded some of the strongest growth. That pace eased as the year went on, but Manchester still ended 2025 with above-average annual growth. Official data shows Manchester ended 2025 with annual price growth of around 5.7%, more than double the national rate, with semi-detached homes up about 6.9%.<\/p>\n

Rental yields<\/strong><\/p>\n

With rental property, it is not just about capital growth; it is also about yields. Figures are often quoted on a gross basis – rent as a percentage of purchase price before costs – but the more meaningful number is the net yield, once running costs, voids, finance and tax are taken into account.<\/p>\n

Gross yield = rent before costs<\/p>\n

Net yield = what you actually keep after expenses<\/p>\n

Typical gross yields across England and Wales are around 5\u20136%, with some Northern cities achieving more. But costs matter, such as letting agent fees, maintenance, insurance, tax and mortgage costs. Once these are included, net yields are often 1.5\u20132.5 percentage points lower than the headline figure.<\/p>\n

Some other things to consider<\/strong><\/p>\n

Falling mortgage costs improve cash flow<\/p>\n

If, as expected, the base rate continues to fall, the costs of financing new investments in the sector will come down with it.<\/p>\n

For existing investments, there are around 1.8 million fixed-rate mortgages coming to an end in 2026. Some were taken out at higher rates and may benefit from lower costs on renewal; others, though, were fixed at pandemic-era lows and will see their costs rise.<\/p>\n

Rental supply remains tight<\/p>\n

Many landlords have left the rental market in recent years due to tax and regulatory changes, meaning tenant demand continues to outweigh available rental stock, especially in the North and Midlands.<\/p>\n