UK House Prices Hit Six Month Low as Market Sentiment Falters

The British property market has experienced a notable contraction, with the average house price falling to its lowest point in six months during December. According to mortgage lender Halifax, the typical UK property value declined by 0.6 percent, equivalent to £1,789, to reach £297,755 on a month-on-month basis. This downturn reflects broader challenges facing the housing sector as it navigates economic uncertainty and subdued buyer confidence.

Annual house price growth has decelerated sharply, slowing to just 0.3 percent in December compared with 3.2 percent recorded in the same month a year earlier. This marked deceleration underscores the significance of market headwinds that have developed throughout 2025. The decline appears particularly pronounced in London and the southeast, where geographical concentration of economic activity and property wealth has historically driven price movements.

Amanda Bryden, head of mortgages at Halifax, attributed much of December’s weakness to what she characterised as the “spectre of uncertainty” surrounding the government’s late autumn budget. Speculation regarding potential tax changes appears to have dampened purchasing sentiment among both owner-occupiers and investors during the final quarter of 2025. The housebuilder Taylor Wimpey reported that its net private sales rate fell to 0.63 during the period spanning June 30 to November 9, declining from 0.71 over the equivalent timeframe in the previous year.

The Bank of England’s monetary policy stance has provided some support to the broader economic environment. The central bank reduced its base rate by 0.25 percentage points in December, bringing the rate to 3.75 percent. Despite these reductions, the cuts have proven less substantial than market participants had anticipated, limiting their stimulatory impact on property demand.

Regional disparities have become increasingly evident. Greater London experienced the steepest declines, with average prices falling 1.3 percent year-on-year to £539,086. The southeast of England recorded a 0.9 percent reduction to £386,692, whilst eastern England saw prices decline by 0.8 percent to £333,617. By contrast, Northern Ireland demonstrated resilience with prices rising more than 7.5 percent annually to £221,062; Scotland recorded growth of 3.9 percent to £217,775.

Looking ahead, Bryden forecast modest house price appreciation of between 1 and 3 percent during 2026, contingent upon continued mortgage rate reductions and expanded lending options. However, she cautioned that headwinds including wage inflation deceleration and flattening employment rates may constrain purchasing power among prospective buyers. The Financial Conduct Authority’s proposed relaxation of mortgage lending restrictions, designed to assist first-time buyers, the self-employed, and older borrowers, may provide additional support to market activity during the forthcoming months.