UK house prices dipped by 0.6% in December, following a marginal fall of 0.1% in November, according to the latest Halifax House Price Index.
The average property price now stands at £297,755, down £1,789 over the month and the lowest level recorded since June 2025. Annual growth slowed to 0.3%, easing back from 0.6% in November and reinforcing the picture of a market that has broadly moved sideways over the past year.
Amanda Bryden, head of mortgages at 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%.”
REGIONAL VARIATIONS
Regional data continued to show marked differences across the UK. Northern Ireland remained the strongest performing nation or region, with prices rising by 7.5% over the past year to an average of £221,062.
In Scotland, average house prices increased by 3.9% annually to £217,775, while property values in Wales rose by 1.6% over the year to £230,233.
Within England, the North East recorded the strongest annual growth, with prices up 3.5% to £181,798, followed by the North West where values rose by 2.8% to £245,323. In contrast, London prices fell by 1.3% over the course of 2025 to £539,086.
SUBDUED MARKET
Karen Noye, mortgage spokesperson at Quilter, said: “The end of the year often leaves the housing market short on urgency, and December was no exception.
“With many households having already mentally parked moving plans, the late timing of the Budget added a further reason for buyers and sellers to pause, leaving activity limited as attention shifted towards the New Year rather than pushing ahead before Christmas.
“Against that backdrop, Halifax’s figures showing prices falling by 0.6% over the month point to a market that was subdued rather than fundamentally weakening.
“On an annual basis, prices are just 0.3% higher than a year ago, reinforcing the sense that values have largely moved sideways over the past year. While demand has been cautious, constrained supply continues to limit the scope for any meaningful price correction.
“A slower-moving market has important implications for mortgage pricing. With fewer borrowers coming through the door, lenders are likely to compete more aggressively for business, particularly among lower-risk borrowers. That competitive pressure should help keep mortgage rates edging lower over time, even if any improvements are gradual rather than dramatic.
“For remortgagers, this shift is especially important. While many households are still facing higher repayments than a few years ago, increased competition should reduce the risk of the sharp payment shocks that have weighed on confidence.
“As we move further into 2026, greater clarity following the budget and on the direction of interest rates may encourage some of the decisions that were delayed at the end of last year to begin feeding back into the market, supporting a modest pick-up in activity rather than a sudden rebound.”
JANUARY BODES WELL
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “After a busy start to December, with lots of mortgage rate reductions, there was a lull over the festive period but January has started with a raft of rate cuts led by HSBC, which bodes well for borrowers.
“Leading two-year fixes start from just over 3.5% while their five-year equivalents start from just over 3.7%, and further gradual falls are expected as lenders compete for business.
“With markets expecting one to three further base-rate reductions this year, the rock-bottom rates of the past may be long gone but pricing is becoming increasingly palatable to borrowers, which should boost activity.”
NON-RAMPANT HOUSING MARKET
Gareth Lewis, deputy CEO of specialist lender MT Finance, said: “A flatter property market in terms of values is better for all concerned. While the interest-rate environment is more positive, with sentiment pointing towards further cuts this year and lenders keen to offer attractive mortgage rates, it doesn’t take away from the fact that wages aren’t rising quickly enough to combat the higher cost of living.
“You can only buy what you can afford so flatter prices can only be considered a good thing. However, a non-rampant housing market is not enough to provide impetus when it comes to encouraging buyers and sellers to transact.
The government must do its bit and encourage more transactions through stimulus for first-time buyers, perhaps in the form of a resurrected Help to Buy scheme.”
