THE AVERAGE UK property price is now £297,755, the lowest since June, according to the Halifax, which says house prices fell by 0.6% in the final month of 2025. Annual growth, the lender added, slowed to +0.3%, down from +0.6% in November. Northern Ireland continues to be the UK’s strongest performing nation or region.
Amanda Bryden, Head of Mortgages, Halifax, said: “Average house prices fell by -0.6% in December, down £1,789 compared to November, with a typical property now costing £297,755, the lowest since June 2025. On an annual basis, growth slowed to +0.3%, down from +0.6% in November.
“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.
“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%.”
Nations and regions house prices
On a regional front, Northern Ireland remained the strongest performing nation or region in the UK, with average property prices rising +7.5% over the past year, with 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. While 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.
A quarter of uncertainty
Shaun Sturgess, Director at Swansea-based Sturgess Mortgage Solutions, agreed with the Halifax that lower lending rates are starting to drive activity levels and that this trend will continue into 2026.
He said: “The fourth quarter of 2025 was defined by pre-Budget uncertainty and then people sitting on their hands until the rate decision.
“While prices may have dropped last month, we expect that trend to reverse in the first few months of the year as there is a huge amount of pent-up demand out there, which is being supported by lenders shaving their rates.”
Omer Mehmet, Managing Director at Welling-based Trinity Finance, said that while prices may have fallen last month, activity was stronger than usual in December as the Budget was relatively benign on the property front. He also expects activity levels to bounce back in the early stages of 2026.
He added: “Budget uncertainty almost certainly contributed to people putting house moves on hold in November and there was also anticipation ahead of the Bank of England rate decision on 18th December that saw many people sit tight.
“But following last month’s base rate cut, we’re expecting lenders to start actively competing for new business in January to make up for a quiet fourth quarter. The first quarter of 2026 could be the polar opposite of the last quarter of 2025, which was fairly subdued.”
Pent-up demand
Andrew Montlake, CEO at London-based Coreco, said he expects the December dip to rebound in the early stages of 2026 as pent-up demand feeds through, lenders cut rates following the base rate cut and buyers start to get on with their lives after a quieter than usual fourth quarter.
He said: “Many people sat on their hands ahead of the Budget and, following the rate cut delivered by the Bank of England in December, we’re anticipating a lot of pent-up demand to feed through in January and beyond.”
Ranald Mitchell, Director at Norwich-based Charwin Mortgages, said last month was busy irrespective of the price fall: “December wasn’t the usual Christmas dead zone. Activity ran right up to the final day, off the back of a very busy November.
“Purchase enquiries stayed strong throughout the month and that momentum has carried straight into January, which tells you demand hasn’t gone anywhere.
“When lenders keep sharpening rates and confidence in borrowing costs improves, buyers simply get on with it.
“And first-time buyers held their ground. They’re still cautious because affordability is the gatekeeper, but where the numbers stack up, they’re ready to move. The appetite is there, but the monthly payment makes the decision.”
Phones ringing again
Aaron Strutt, Product and Communications Director at London-based Trinity Financial, added: “We had a busy December with property purchases and remortgages. Our phones started ringing again, and more enquiries came through almost as soon as the Budget was announced and people knew just how they were going to be affected.
“There is generally a natural market slowdown in December, but we were still helping lots of first-time buyers work out their mortgage affordability and getting mortgages agreed for those with offers accepted.
“It really is a buyer’s market at the moment, and potential borrowers are biding their time to make sure they get a decent property at the right price.”
