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.
On an annual basis, growth slowed to +0.3%, down from +0.6% in November.
This is according to the Halifax – the second house price index this week to record a price drop.
Halifax’s analysis
Amanda Bryden, head of mortgages at the Halifax, comments: “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 [2026] of between 1% and 3%.”
A financial analyst’s view
Alice Haine of Bestinvest by Evelyn Partners is in no doubt about the cause of the price dip.
She says: “While Chancellor Rachel Reeves’ property tax hikes in November proved less widespread and imminent than many had feared, the uncertainty in the lead-up to the fiscal statement weighed heavily on market sentiment, with some buyers and sellers rushing to complete before the announcement, while others paused or abandoned plans altogether.
“While rumours of sweeping council tax reform and capital gains tax on high-value residences did not materialise, other concerns were realised with the introduction of a new ‘mansion tax’ at the Budget, via a council tax surcharge on properties valued above £2 million, which won’t arrive until 2028.
“In addition, a hike in income tax on property income of 2-percentage-points from April next year delivered another blow to landlords, who have already endured a series of tax and regulatory changes in recent years.”
She says how much the broadly resilient housing market over the rest of 2025 will translate into price rises this year will depend on the impact of the Chancellor’s latest property tax measures and wider economic challenges.
“Consumer sentiment remains subdued, with households spending cautiously amid rising unemployment, slower economic growth, and still-elevated borrowing costs compared to those pre-pandemic lows” she concludes.
