UK House Prices Fall Sharply in December

Published: 02 January 2026. The English Chronicle Desk. The English Chronicle Online.

UK house prices fell sharply in December, according to Nationwide, marking the weakest annual growth in more than eighteen months. The average property value dropped by 0.4% to £271,068 compared with November, confounding City expectations for a modest 0.1% rise. Nationwide noted that the annual increase slowed to just 0.6%, the lowest rate since April 2024. Analysts say that this decline reflects both seasonal market slowdown and uncertainty caused by delayed fiscal policy decisions. UK house prices have consistently shown resilience through the turbulence of 2025 despite sporadic volatility caused by stamp duty adjustments.

Financial planner Ian Futcher from Quilter explained that the year-end dip was magnified as prospective buyers postponed purchases due to the timing of the budget. Many had initially expected clarity earlier, but delays led households to defer decisions until after festive spending. Nationwide added that while the final month of 2025 was softer, overall market activity remained remarkably steady. Mortgage approvals hovered near pre-pandemic levels, reflecting continued demand among serious buyers, especially first-time homeowners. UK house prices remain particularly accessible for buyers compared with incomes, marking affordability at its strongest since late 2015.

The December decline followed earlier volatility caused by stamp duty reforms in April, which created uncertainty during the spring and summer months. Additionally, the November budget announcement contributed to subdued market sentiment toward the end of the year. Robert Gardner, Nationwide’s chief economist, highlighted that despite modest consumer confidence and higher mortgage rates, the market demonstrated remarkable resilience throughout the year. First-time buyers’ share of house purchases exceeded the long-term average, with many securing loans against deposits of 15% or less, the highest level in a decade.

Halifax reinforced these findings, noting that December presented one of the best opportunities for prospective buyers to enter the property market in ten years. The Bank of England’s decision to reduce interest rates from 4% to 3.75% last month is expected to further stimulate housing activity, potentially reversing some of the late-year caution among buyers. Futcher remarked that the interest rate cut, combined with fiscal clarity, could encourage shelved housing plans to proceed, giving the market a renewed boost in 2026.

Despite these fluctuations, UK house prices displayed underlying strength throughout the year, with localized pockets of growth in regions outside London and the South East. Properties in Northern England and Wales experienced stronger demand, with price rises outpacing national averages, illustrating a more balanced market than previous years. Nationwide emphasized that while headline figures suggest a slight slowdown, the market fundamentals remain supportive of sustained activity, particularly as mortgage approvals remain robust.

Looking ahead, experts predict a more stable environment in 2026, with the combination of lower interest rates, ongoing first-time buyer demand, and regional growth expected to provide momentum for the housing market. The interplay between fiscal decisions and monetary policy will continue to shape house price trends, but UK house prices are likely to regain modest upward movement as confidence returns.

Overall, the year-end decline in house prices serves as a reminder of market sensitivity to fiscal timing, seasonal factors, and policy signals. Yet, underlying demand, particularly from first-time buyers and affordability metrics, indicates that UK house prices retain potential for recovery and gradual growth throughout the coming year. Nationwide concludes that while 2025 ended on a softer note, the structural conditions supporting property transactions remain positive, giving buyers and investors reason to remain optimistic.

Check our latest news