UK house prices edged lower in December, with the average home value falling by £1,789 compared with the previous month, according to the latest Halifax House Price Index. This brought the typical cost of a property across the UK to £297,755.
The monthly decline represented a 0.6% drop from November, marking the weakest point for average prices since June. Halifax suggested this slowdown reflected the uncertainty that lingered towards the end of the year.
Although prices slipped on a month-by-month basis, annual growth remained slightly positive. Compared with December last year, house prices were up by 0.3%, though this was a slowdown from the 0.6% annual increase recorded in November.
Amanda Bryden, head of mortgages at Halifax, said the figures pointed to a subdued end to 2025 for the housing market. However, she stressed that activity over the year as a whole held up better than many had expected.
She noted that buyer and seller activity across 2025 was broadly in line with the pre-pandemic average, suggesting that confidence had remained relatively resilient despite ongoing economic pressures.
Regional trends continued to vary widely across the UK. Northern Ireland once again recorded the strongest annual performance, with house prices rising by 7.5% over the past year. The average home in the region is now valued at £221,062.
Scotland also saw solid growth, with prices increasing by 3.9% year on year in December. This pushed the average property value north of the border to £217,775.
In Wales, annual growth was more modest. House prices rose by 1.6% compared with a year earlier, bringing the typical Welsh home price to £230,233.
Within England, the North East emerged as the strongest-performing region, posting annual growth of 3.5%. Average prices there now stand at £181,798, continuing the trend of stronger growth outside the South.
London, however, told a different story. Property prices in the capital fell by 1.3% over the course of 2025, with the average home now costing £539,086. This reflects ongoing affordability pressures and slower demand at higher price points.
Looking ahead, Bryden said several factors could help steady the market as 2026 gets underway. She suggested that December’s price fall was likely linked to late-year uncertainty, which is now beginning to ease.
One of the most significant developments has been the recent reduction in mortgage rates. Following the Bank of England’s decision to cut the base rate from 4% to 3.75% in December, borrowing costs have fallen to their lowest level in almost three years.
Bryden said lenders are already responding, with a growing number of mortgage products becoming available, particularly for buyers borrowing at higher loan-to-value ratios. This could help improve access to the market for some households.
Despite this, affordability challenges remain. However, Halifax highlighted that the house price-to-income ratio reached its lowest level in over a decade in December, offering some reassurance to prospective buyers.
Taking all factors into account, Halifax expects modest growth in house prices during 2026. The lender forecasts values could rise by between 1% and 3% over the year, even as slower wage growth and a cooling jobs market continue to act as headwinds.
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