Affordability pressures persist despite modest easing in prices
UK property values slipped by 0.6% in December, a month-on-month fall of £1,789 that left the average home priced at £297,755, the lowest level since June 2025.
The latest Halifax House Price Index also showed that annual growth eased, with prices up 0.3% year on year compared with 0.6% in November.
Amanda Bryden (pictured right), head of mortgages at Halifax, pointed out that while the December figures 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,” she said. “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.”
Bryden added that 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%,” she said.
For Nathan Emerson, chief executive of trade body Propertymark, 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,” Emerson said.
House prices up year on year in most regions
The Halifax report showed a divergent picture across the UK nations and English regions.
Northern Ireland recorded the strongest annual performance, with average prices up 7.5% year on year and a typical home valued at £221,062.
In Scotland, average property values reached £217,775 in December, representing annual growth of 3.9; while in Wales, prices were up 1.6% over the year, with the average home now standing at £230,233.
Across England, the North East led regional growth, with prices rising by 3.5% to £181,798. The North West followed, posting a 2.8% annual increase to £245,323.
London remained an outlier on the downside, with average values declining by 1.3% through 2025 to £539,086.
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