The news that house prices fell up to 0.6 per cent on average in December might be an alarming headline number for homeowners – but most experts believe now is not the time to panic.
Uncertainty around possible property-related tax changes to be announced in Rachel Reeves’s autumn Budget led to an abundance of caution despite falling interest rates and some lenders increasing their affordability limits for mortgages.
The latest Halifax price index shows the average home in the UK is now £297,755 – up just 0.3 per cent over a year, following a smaller, 0.1 per cent decrease in November before this latest fall.
But more certainty heading into 2026, combined with a range of factors which leave buyers still holding plenty of demand, means experts think prices will stabilise in the short term and start to rise again as the year goes on.
Alice Haine, personal finance analyst at Bestinvest, pointed to the political situation having eased and the wider property buying environment now looking clearer. “While chancellor Rachel Reeves’s 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,” she said.
“Mortgage rates eased dramatically in 2025, helped by six interest rate cuts since August 2024, with further improvement potentially in the pipeline after the central bank signalled a more relaxed stance on monetary policy, citing that inflation has already peaked.
“It’s not only first-time buyers that can benefit from improved deals. With around 1.8 million fixed deals set to expire in 2026, those refinancing two- or three-year fixes could also enjoy lower repayments.”
Other industry experts were broadly in line with that assessment.
Tom Bill, head of UK residential research at estate agents 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 feel-good factor in the early months of 2026.
“Despite the growing risk of domestic political uncertainty, we believe house price growth should climb to 3 per cent by the end of the year.”
Jonathan Hopper, CEO of Garrington Property Finders, added that London was an exception to the overall uptick in prices across the year.
“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 per cent 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.
“With interest rates back below 4 per cent and homes across London and the South East 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.”
Elsewhere, Andrew Montlake of mortgage broker Coreco echoed the expectation of increased activity, saying he was “anticipating a lot of pent-up demand to feed through in January and beyond”, while Ranald Mitchell, director at Charwin Mortgages, added: “Demand hasn’t gone anywhere.
“When lenders keep sharpening rates and confidence in borrowing costs improves, buyers simply get on with it.
“And first-time buyers held their ground. They’re still cautious because affordability is the gatekeeper, but where the numbers stack up, they’re ready to move. The appetite is there, but the monthly payment makes the decision.”
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