House prices hit six-month low as average home loses nearly £1.8k in December

It follows a smaller 0.1 per cent drop the month before, suggesting the market cooled as the year drew to an end.

Year-on-year growth also slowed down, falling to just 0.3 per cent in December compared with 0.6 per cent the previous month.

But despite this somewhat muted finish, Halifax noted that overall activity throughout 2025 held up well and remained broadly consistent with pre-pandemic levels.

Looking at the regional picture, Northern Ireland came out on top once again, posting the strongest annual growth of any UK nation or region at 7.5 per cent, pushing average prices to £221,062.

Scotland wasn't far behind with a 3.9 per cent yearly rise, bringing typical property values to £217,775. Wales saw more modest gains of 1.6 per cent, with homes now averaging £230,233.

Within England, the North East performed best with 3.5 per cent annual growth and an average price of £181,798, while the North West followed at 2.8 per cent with homes costing £245,323 on average.

London, however, struggled the most, with property values actually falling 1.3 per cent over the course of 2025, though average prices there still sit at £539,086.

Amanda Bryden, head of mortgages at Halifax, 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.

"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."

She pointed to mortgage rates already coming down following the latest Base Rate cut, with more lending options now available for those with smaller deposits.

There's good news for first-time buyers too, with the house price to income ratio hitting its lowest level in over a decade during December.

Halifax expects prices to rise modestly by between one per cent and three per cent over the coming year, though Bryden acknowledged potential headwinds, including slowing wage growth and flattening employment rates.

Industry experts are feeling upbeat about what lies ahead, despite December's dip.

Marc von Grundherr, director of Benham and Reeves, said: "A monthly drop in house prices during December may seem like the proverbial lump of coal, but it is simply a case of seasonality and the underlying feeling currently pulsing through the market is one of optimism.

"With the political uncertainty of the Budget having now evaporated and interest rates trending downwards, the nation's buyers are re-entering the market with renewed vigour, and the outlook for 2026 is a positive one."

Verona Frankish, CEO of Yopa, echoed this sentiment, noting that the Christmas period typically sees both buyers and sellers pause their plans.

She added that with Budget uncertainty now behind us and rates falling before Christmas, buyer confidence has strengthened and market activity is already picking up.