Average house prices fell by 0.6% in December, with a typical property now costing £297,755, the lowest since June 2025, according to the latest Halifax house price index.
On an annual basis, growth slowed to 0.3%, down from 0.6% in November.
Northern Ireland continues as the strongest performing nation or region in the UK, with average property prices rising 7.5% over the past year. Scotland recorded annual price growth of 3.9% in December and property values in Wales rose 1.6% over the year.
In England, the North East had the highest annual growth rate, where 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.
Amanda Bryden, head of mortgages at Halifax, said: “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%.”
Karen Noye, mortgage expert at Quilter, commented: “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.”
Jonathan Hopper, CEO of Garrington Property Finders, added: “Property prices ended 2025 with a whimper, not a bang. November’s 0.1% slide in average prices accelerated into a 0.6% drop in December after months of pre-Budget jitters sapped buyer confidence and chilled prices. With fewer buyers around, sellers were negotiating against risk rather than optimism, and the result was more subdued price growth rather than outright weakness.
“In most areas, December’s fall was the low point in a year of two halves. The exception is London, which saw prices flatline or fall throughout 2025; the Halifax data shows average prices in the capital fell by 1.3% during the year, but in the capital’s most expensive postcodes we’ve seen double-digit declines.
“For buyers, such price corrections are good news. Falling prices, combined with lower interest rates and rising salaries, have made homes more affordable and Halifax’s data shows that the house price to income ratio is now at its lowest level in over a decade.
“The start of January is traditionally a busy time in the market, as many people who’ve been putting off moving decide that the new year is finally time for a new home.
“The surge has been especially strong at the start of 2026, as the thousands of would-be buyers who pressed pause ahead of the Budget return to the market.
“With interest rates back below 4% and homes across London and the southeast looking considerably better value than they did a year ago, the shackles are finally off.
“Better value and abundant choice are pulling buyers in and property portals and estate agents have seen a busy start to the year - though prices are likely to creep, rather than career, back into growth over coming months.”
