House prices fall to lowest level since June: Halifax

"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"
- Amanda Bryden - Halifax

House prices fell 0.6% in December to £297,755, the lowest average since June, following a 0.1% drop in November. Annual growth slowed to 0.3%, down from 0.6% the previous month.

Northern Ireland remains the UK's strongest performing nation, with average property prices rising 7.5% over the past year. A typical home in the region now costs £221,062.

Scotland recorded annual price growth of 3.9% in December, with the average home costing £217,775. Property values in Wales rose 1.6% over the year to an average of £230,233.

The North East had the highest annual growth rate in England, with property prices rising 3.5% to £181,798. The North West followed with growth of 2.8% to £245,323. London saw property prices fall 1.3% over 2025 to £539,086.

"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," said Amanda Bryden, head of mortgages at Halifax. "On an annual basis, growth slowed to 0.3%, down from 0.6% in November."

She added that while the figures suggest a subdued close to the housing market in 2025, overall activity levels proved resilient over the last year and remained broadly in line with the pre-pandemic average.

"Various forces are poised to somewhat buoy the market heading into 2026," Bryden explained. "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."

Affordability pressures persist, but the house price to income ratio reached its lowest level in over a decade in December, Bryden noted, 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%," she said.

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.”

Tom Bill, head of UK residential research at Knight Frank, said, “House price growth effectively evaporated last year as supply built and demand was undermined during months of tax speculation before the Budget."

"Now there is more clarity and mortgage rates continue to head lower, we expect stability rather than the feelgood factor in the early months of 2026. Despite the growing risk of domestic political uncertainty, we believe house price growth should climb to 3% by the end of the year.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, says, “Prices may have slipped a little while some caution remains but since returning after the break we have noticed in our offices how recent falls in interest rates and inflation have started to improve buyer and seller confidence." 

“Although historically reliable, these figures do reflect the time leading up to the Budget and Christmas when worries about tax increases meant decision-making was put on hold by many. Looking forward we expect prices to slowly rise but to no great heights bearing in mind the amount of choice available and concerns about the economy."

Gareth Lewis, deputy CEO of specialist lender MT Finance, says: “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."

Jason Tebb, President of OnTheMarket, comments, “While affordability concerns and increased stock levels keep property prices in check to an extent, nevertheless the housing market continues to demonstrate considerable resilience. Although speculation as to what the Budget might hold created uncertainty with some pausing and putting moving plans on hold, there are signs that buyers and sellers are putting this behind them.

"Falling interest rates have significantly boosted confidence. Six rate cuts in the past 17 months, with more expected this year as inflation appears to have peaked, are easing affordability and giving comfort to those planning a move. As lenders tweaked their mortgage rates downwards towards the end of last year and continue to do so at the start of this one, this will provide further impetus and encourage activity.”