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This is Chubby Wallet. The newsletter that teaches you how to profit from property trends before they go mainstream..

Here's what’s in store..

• Bank of England drops interest rate to 3.75%

• Why housing shortfall could fuel investor gains

• Auction volumes' climb 17.8% year-on-year

LATEST DEVELOPMENTS

INTEREST RATES

BoE drops interest rates to 3.75%

The Bank of England has started cutting rates. This matters because property reacts fast to cheaper money. The likely outcome is not a boom, but a steady recovery in 2026, with more sales, modest price rises, and slightly better affordability. Supply shortages will limit how far this goes.

The details:

• Rates are coming down: Markets expect Bank Rate to fall to around 3.5–4% by mid-2026. When this happens, five-year fixed mortgage rates usually fall by a similar amount. A 0.5–1.0% drop in rates typically shows up in mortgage pricing within weeks.

• Monthly payments will fall for millions: Around 1.5–2 million mortgages reset each year. As borrowers refinance onto lower rates, many will see payments fall by £200–£400 per month. That reduces stress and cuts the risk of forced sales.

• Buying power improves: Lower rates mean buyers can borrow more for the same income. Mortgage costs for new buyers should fall back toward 28–30% of income, down from 35%+ in 2023–24.

• Sales activity should recover first: Transactions fell sharply after rates rose in 2022–23. In 2026, sales are expected to rise by 15–25% year on year, moving back toward 1.2–1.3 million homes sold annually, closer to normal levels.

• Prices are likely to rise, but unevenly: National prices are forecast to grow by about 4–7% in 2026. – North West, Midlands, Yorkshire: 7–9% – London and South East: 3–5%, held back by high prices and taxes

• Rents should cool, not crash: As lower rates stabilise landlords and reduce exits, rent growth is expected to ease to around 3–4% nationally, down from recent highs.

• Supply remains the bottleneck: The UK is building about 200–240k homes a year, well below the 300–350k needed to keep prices stable. Without more homes, lower rates mainly push prices up rather than increasing choice

Why It Matters

Rate cuts change behaviour before they change headlines. Cheaper mortgages free up cash, lift confidence, and bring buyers back. But because housing supply is still tight, the recovery shows up first in activity, then in prices. For investors and buyers, 2026 looks less like a boom and more like a reset: fewer distressed sellers, more competition than today, and steady upward pressure where supply is weakest.

SALES AND STOCK LEVELS

RICS surveyors predict price gains ahead

The latest RICS (Royal Institute of Chartered Surveyors) housing survey looks bleak on the surface, but the numbers point to a market that has slowed, not broken. Buyer activity is weaker, sales are slower, and London is under pressure. The more important shift is that supply is pulling back even faster than demand.

The details

• Buyer interest has cooled sharply: Surveyors report that new buyer enquiries are down, with about 32% more seeing falls than rises. This is the weakest reading in roughly two years and reflects uncertainty rather than distress.

• Sales are slower, but not collapsing: Around 23% more surveyors say sales are falling than rising, showing hesitation and longer decision times, not forced selling.

• Prices look weaker mainly because of London: Across the UK, prices are slightly down overall, with 16% more surveyors reporting falls than rises. In London, this jumps to 44%, driven by higher taxes on expensive homes and the Autumn Budget fallout. Other regions, including Scotland and Northern Ireland, are holding up better.

• The big shift is on the supply side: 19% more surveyors report fewer homes being listed for sale, and an even larger 40% report fewer new valuations. In simple terms, owners are choosing not to sell.

• The rental market is tightening beneath the surface: Tenant demand has eased, with 22% more surveyors seeing falls than rises, but landlord supply has dropped much faster, with 39% more seeing fewer rental listings.

• Expectations are already improving: Despite today’s weakness, surveyors expect prices to rise over the next year, with 24% more predicting increases than falls, and sales activity to improve, with 15% more expecting higher sales as the market moves into 2026.

Why It Matters

Right now, buyer demand is weaker, but seller supply is shrinking faster. This is quietly setting the stage for rising prices as rates drop in 2026 and buyers return. For property investors, this means stay patient, avoid panic selling in today's soft market, and get ready for stronger price gains ahead.

AUCTIONS UPDATE

AUCTIONS

Auction volumes grow 17% yoy

According to EIG auctions, November’s data shows the auction market is far healthier than general sentiment suggests. Volumes are up, money raised is up, and residential demand is doing the heavy lifting. As politics and rate worries grab the headlines, auctions are becoming the main avenue for sellers and buyers to transact in a transparent way

The Details:

• More sellers need certainty. Landlords, developers and estates unwinding assets are choosing speed over hope.

• Capital is still active, just more selective. Buyers are not chasing anything. They are pricing risk properly and demanding margin. Auctions reward those who understand value, not narrative.

• Capital is flowing to regions with jobs, population stability and liquidity. It is retreating from areas where affordability, credit and demand are weakest.

Why it matters

For everyday investors, auctions are becoming the most honest signal in UK property. They show where credit is tight, where sellers blink first, and where real pricing power sits. In a market shaped by regulation and demographic pressure, the best opportunities are rarely listed beautifully. They are discovered, underwritten and bought where price meets reality.

That's it for this week folks. Each week we'll cover strategies, updates and insights to help you succeed in real estate. We love this stuff!

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