House prices dipped in December as annual growth slows – Halifax

UK house prices fell for a second consecutive month in December, delivering a softer end to the year for the housing market, Halifax says.

Prices dropped by -0.6% during the month, following a -0.1% decline in November, taking the average property value to £297,755.

That’s £1,789 lower than a month earlier and the lowest level recorded since June.

Annual growth also eased, slowing to +0.3% from +0.6% in November, signalling a cooling pace as 2025 ended.

Market is resilient

The lender’s head of mortgages, Amanda Bryden, 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.

“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.”

She added: “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 house prices

Halifax data shows that regional performance remains mixed with Northern Ireland again leading the UK.

Average house prices there rose +7.5% over the year to £221,062, making it the strongest performing nation or region.

In Scotland, values increased +3.9% annually, taking the typical home price to £217,775, while Wales recorded growth of +1.6%, with an average of £230,233.

Within England, the North East posted the fastest annual increase, up +3.5% to £181,798, followed by the North West, where prices rose +2.8% to £245,323.

London continued to lag behind the rest of the country, with prices falling by -1.3% over the course of 2025 to £539,086.

Property sector reaction

Nathan Emerson, the 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.”

Karen Noye, a mortgage expert at Quilter, said: “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.”

Amy Reynolds, the head of sales at Richmond estate agency Antony Roberts, said: “There are clear signs that the market is on a more positive footing.

“We’ve seen a genuine post-Budget bounce, with improved buyer confidence and several sealed bids in December and already in January – something that was far less common last year.

“This isn’t a market racing ahead, but it does feel smoother and more predictable than 2025.

“More people want their homes valued, good homes are generating viewings, and the very best properties are already achieving stronger prices as competition returns.”

Tom Bill, the 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.”