House prices ended 2025 lower than a year earlier after an unusually subdued second half of the year but activity is expected to pick up sharply over the Christmas period, with average asking prices forecast to rise by 2% in 2026.

The average price of property coming to the market fell by 1.8% in December to £358,138, according to data from Rightmove.

While prices typically ease at this time of year, the decline was steeper than the 10-year December average fall of 1.4%, reflecting weaker confidence in the run-up to the Autumn Budget.

As a result, 2025 closed with average asking prices 0.6% lower than a year earlier. Regional performance diverged sharply, with prices rising by 2.6% in the North West, remaining flat in London and falling by 2.7% in the South West.

SEASONAL SLOWDOWN

Rightmove said uncertainty around potential property tax changes amplified the usual seasonal slowdown in activity, particularly during the second half of the year. That contrasted with a stronger first half, when lower price growth helped to support affordability and transaction volumes.

The property portal now expects a larger-than-usual surge in demand around Boxing Day, traditionally the start of the busiest period for home movers.

A survey of more than 10,000 potential movers found that nearly one in five had paused their plans while waiting for clarity from the Budget, suggesting a significant pool of pent-up demand.

TAX CHANGES

There are already early signs of renewed activity in parts of the market. In London, the number of new sellers listing higher-value homes rose by 24% in the week following the Budget compared with the previous week, after months of hesitation driven by speculation around tax changes.

Looking ahead, Rightmove expects market conditions in 2026 to resemble the more buoyant first half of 2025 rather than the subdued latter months. Buyer choice remains at its highest level for a decade, while affordability is set to improve as mortgage rates ease and wage growth continues to outpace inflation.

Average new seller asking prices are forecast to rise by 2% next year. Rightmove’s mortgage tracker shows the average 2-year fixed rate has fallen to 4.33%, down from 5.08% at the same point last year, while a gradual loosening of lending criteria is also expected to support borrowing.

BOXING DAY BOUNCE

Colleen Babcock, property expert at Rightmove, said lower price growth earlier in 2025 had helped to drive activity, but that confidence was dented later in the year by prolonged Budget speculation.

She said the market would soon benefit from the traditional Boxing Day uplift in activity, as many buyers and sellers resumed plans that had been put on hold.

“With the turkey and trimmings barely off the table, each year we see people heading straight to Rightmove to browse fresh listings and imagine how different next Christmas could look,” she said.

Rightmove’s data illustrates the contrast between the two halves of the year. The number of new sellers coming to market in the first half of 2025 was 9% higher than in the same period of 2024, but fell to 4% below last year’s levels in the second half.

STABLE BACKDROP

Buyer demand followed a similar pattern, running 3% ahead of 2024 in the first half before slipping to 6% behind in the latter months.

Despite the slowdown, overall sales agreed across 2025 were still 3% higher than in 2024, though comparisons were distorted by a strong finish to last year as buyers rushed to complete ahead of April’s stamp duty changes.

Babcock said that while sellers would still need to price competitively in a market with plenty of choice, a more stable economic backdrop in 2026 should help restore confidence and support a modest recovery in prices.

CHEAPER MORTGAGES

Matt Smith, Rightmove’s mortgage expert, said: “We’re expecting to end the year with a Bank Rate cut, which would be good for confidence heading into the Rightmove Boxing Day Bounce.

“It’s unlikely that it will cause much movement in mortgage rates – the markets are very much expecting December’s cut to go ahead, and lenders have shown their hand early, cutting rates and competing to secure end-of-year business. The headline is that home-movers will be entering 2026 looking at cheaper average mortgage rates than they were at the beginning of 2025, helping affordability.

“Those who are seeing slightly lower house prices in their area compared to last year and may have also had an end-of-year pay rise, will see their affordability improved further. Many home-movers will also see that the amount that they can borrow has increased, as lender have been rolling out the Loan-To-Income and stress rate changes that were permitted by the regulator earlier this year.”

IMPROVED AFFORDABILITY

Tomer Aboody, director of specialist lender MT Finance, said: “With the Budget now over and done with, the uncertainty and hesitancy is also over and buyers are ready to make their move.

“Despite a lot of negative speculation beforehand, the Budget left the property market mostly unscathed.

 “With sellers coming to the market and buyers potentially ready to pounce, as well as lower mortgage rates, the scene looks set for a bounce at the start of 2026.

 “With the money markets expecting another base rate cut, the improved affordability this will bring will encourage movement – and the market certainly needs that encouragement.”

TWO-TIER MARKET

Jeremy Leaf, north London estate agent and a former RICS residential chairman, added: “Our experience of the post-Budget period doesn’t chime with Rightmove’s but perhaps that’s because the UK’s largest property portal measures asking or aspirational prices rather than values.

“On the ground, we’ve noticed many buyers and sellers have been sitting on their hands, fearing the worst from the Chancellor, before deciding whether to act.

 “The damp squib of a Budget has heartened those in the more price-sensitive £500,000 to £1 million bracket who are breathing a sigh of relief. Those in and around the ‘mansion tax’ levels are generally proving more cautious and not contemplating moves unless circumstances dictate – or at least further details of charging emerge.

“Values will be determined by affordability.”

“As a result, we expect a two-tier market to develop in the early New Year with demand gradually increasing for smaller homes particularly if base rate is reduced sooner rather than later.

 “We generally find Boxing Day generates a lot of enquiries of which a significant proportion are of relatively poor quality.

“We prefer to judge how the next quarter at least is likely to work out when we’ve had a chance to assess the motivation of the fresh crop of buyers – as well as the sellers. Values will be determined by affordability and the amount of appropriately priced stock in the most sought-after ranges.”