The Halifax House Price Index for December recorded a dip of -0.6%, following a -0.1% fall in November. The average property price is now £297,755, the lowest since June.
“While this may feel like a subdued close to the housing market in 2025, overall activity levels were resilient over the last year and broadly in line with the pre-pandemic average,” Amanda Bryden, head of mortgages at Halifax, said.
“Various forces are poised to somewhat buoy the market heading into 2026. While December’s monthly fall in prices was likely related to uncertainty in the latter part of the year, this should now be starting to unwind.
“Further, mortgage rates are already reducing following the latest Base Rate cut and there are an increasing number of lending options available for those borrowing at a higher loan-to-value.
“While affordability pressures persist, the house price to income ratio was at its lowest in over a decade in December, striking a positive note for those looking to purchase their first home.
“On this basis, and recognising the headwinds that may affect buying power – such as the slowing of wage inflation and flattening employment rates – we expect a modest rise in house prices during the year of between 1% and 3%.”
Northern Ireland continues as the strongest performing nation or region in the UK, with average property prices rising +7.5% over the past year and a typical home now costing £221,062. In Scotland, the average home now costs £217,775, with the nation recording annual price growth of +3.9% in December.
Property values in Wales rose +1.6% over the year, to an average of £230,233. In England, the North East had the highest annual growth rate, as property prices rose by +3.5%, to £181,798. This was followed by the North West, which saw growth of +2.8%, to £245,323. Property prices in London fell by -1.3% over the course of 2025 to £539,086.
Nathan Emerson, CEO of Propertymark, said:
“A modest fall in house prices highlights that affordability pressures are still weighing on the market, despite recent improvements in mortgage rates. Overall, there is still a sense of consumer caution lingering within the marketplace, mostly in respect of wider economic considerations, such as the rate of inflation and how this directly impacts affordability for many.
“While price softening may help some buyers, especially first-time buyers, a sustainable recovery will depend on further rate stability, income growth, and addressing the chronic undersupply of homes.”
Verona Frankish, CEO of Yopa, commented:
“A marginal monthly dip in December is not unusual and largely reflects the seasonal slowdown that comes with the Christmas period, when both buyers and sellers tend to pause their plans.
“Importantly, the backdrop has improved considerably. With autumn budget uncertainty now behind us and interest rates falling just before Christmas, buyer confidence has strengthened, and we are already seeing a notable uplift in market activity.
“This renewed momentum should provide support for house prices as we move through 2026.”
Iain McKenzie, CEO of The Guild of Property Professionals, said:
“The 0.6% dip in house prices reported by Halifax in December, reflects a market that slowed toward the end of the year rather than any fundamental weakness. With annual growth easing to +0.3%, it’s clear that uncertainty around the Autumn Budget and the usual seasonal slowdown weighed on prices in the final months of 2025.
“However, as we move into January 2026, the year is starting on far firmer ground. The traditional post-Christmas uplift in activity is already becoming evident, and the wider backdrop is far more supportive. The Bank of England’s decision to cut the Bank Rate to 3.75%, combined with mortgage rates continuing to edge lower is improving affordability compared with this time last year.
“Importantly, buyer demand never disappeared. Transaction levels held up well through 2025 despite headwinds, with around 1.2 million homes sold, the highest level since 2022. Many buyers who paused decisions due to uncertainty are now returning with renewed confidence, supported by rising incomes, more stable borrowing costs, and the widest choice of homes in a decade.
“Looking ahead, we expect a stronger-than-usual start to 2026, with higher transaction volumes and a gradually improving outlook for price growth as the year progresses. That said, realism on pricing remains crucial. With plenty of choice available, well-priced homes are attracting interest, while sellers who overreach are more likely to see offers come in below asking. Overall, the market looks set to remain stable, with modest price growth of around 2.4% forecast over the course of the year.”
Anthony Codling, managing director of equity research at RBC Capital Markets, concluded:
“Overall, house prices were stable during 2025, exiting the year just £952 higher, on average, than in 2024. We take this as a positive given the macroeconomic and Budget uncertainty themes which dominated 2025. With wages still rising and mortgage rates expected to fall in 2026 we expect house price growth to be higher in 2026 than in 2025.
“UK house prices are extremely resilient – we note than since 1946 house prices have risen in 65 years and only fallen in 15. When it comes to house prices, it pays to be an optimist. 2025 might not have been a great vintage for UK house prices, but it wasn’t a bad one either.”
