UK house prices increased by 2.4% in the year to December, although values slipped by 0.7% compared with the previous month, leaving the average home priced at £270,000. The slowdown was most pronounced in London and the south of England, according to official figures.
Data from the Office for National Statistics showed London was the only region to post an annual fall, with prices down 1% to £551,294, while the North East led growth with a 4.6% rise.
Across the UK, average prices climbed 1.7% in England to £292,000, rose 5% in Wales to £215,000 and increased 4.9% in Scotland to £191,000. In Northern Ireland, values were up 7.5% year on year in the fourth quarter, reaching £196,000.
Industry reaction:
Verona Frankish, CEO of Yopa:
“While house prices have cooled slightly on a month to month basis, it’s important to note that this data relates to December market conditions, a month that is traditionally one of the quietest points in the housing calendar ahead of the Christmas holidays.
“The more important takeaway is that annual growth remains positive at 2.4% and, notably, first-time buyers are continuing to drive a relatively stronger degree of price appreciation, which highlights their determination to realise the dream of homeownership.
“This sustained activity is helping to underpin the wider market and should provide a solid base for momentum for 2026.”
Nick Leeming, chairman, Jackson-Stops: “December’s figures suggest the market ended 2025 on firmer footing than many expected, with price growth signalling quiet resilience rather than rapid expansion. While activity typically slows in the final weeks of the year, underlying demand has remained steady, particularly in markets where available stock continues to fall short of committed buyer interest.
“The clarity provided by the Autumn Budget is now beginning to translate into greater confidence, and that shift in sentiment helped support pricing as the year closed. Buyers are approaching decisions with more certainty around taxation and fiscal policy, even as affordability remains front of mind.
“After this month’s decision to keep rates unchanged, the market remains in a period of watchful stability. If borrowing costs ease as anticipated in the coming weeks and economic conditions remain stable, the market is well positioned for a more active spring than we have seen in recent years.”
Iain McKenzie, CEO of The Guild of Property Professionals, comments: “The latest UK HPI figures point to a housing market that was stabilising rather than slowing. Annual price growth eased to 2.4% in the year to December 2025, with the average UK home now valued at £270,000. This reflects a market finding its natural balance after several years of volatility.
“The modest monthly dip in December is typical for the time of year and, importantly, is less about weakening demand and more about seasonal dynamics and increased supply. More importantly, transaction levels remained robust, with over 100,000 sales in the month and activity across 2025 running above both 2024 and pre-pandemic norms. This tells us that underlying demand remained resilient.
“Encouragingly, the wider economic backdrop has become more supportive. Inflation easing to around 3% and intensifying competition among lenders are already pushing mortgage rates down, improving affordability, particularly for buyers with larger deposits. With around 1.8 million households due to remortgage in 2026, a downward rate trajectory will be welcome relief and should help sustain market confidence.
“We are already seeing sentiment improve in early 2026. Rising wages, easing borrowing costs and a highly competitive mortgage market are expected to support activity levels, with many agents anticipating an uptick in sales volumes this year. At the same time, a growing supply of homes for sale is giving buyers more choice and will help keep price growth at a sustainable pace.
“Overall, the outlook for 2026 is one of steady, sustainable progress. With prices forecast to rise by around 3.3% and market fundamentals strengthening, we expect a more balanced and accessible housing market to emerge, benefiting both buyers and sellers alike.”
Emma Cox, MD of Real Estate at Shawbrook: “The usual winter slowdown in buying activity, alongside increased stock levels driven by a slower market and properties taking longer to sell, has contributed to a slight drop in house prices.
“Though key incentives such as stamp duty exemption for first-time buyers have been removed, demand does not seem to have faltered, and property purchases appear to still be a priority for many. As glimmers of improving affordability begin to show, confidence should return for professional landlords who have invested in their portfolios.
“However, in a competitive buying environment, a lack of first-time buyer support will continue to drive prospective housebuyers toward the rental market and being able to cater for this demand with quality, energy efficient properties will remain key to bolstering landlords’ strategies.”
Stacy Eden, head of real estate and construction at RSM UK: “The UK House Price Index reveals a static market, with house prices only 3.6% higher than Jan 2023. Concerns around the Autumn Budget continued to have a clear impact on December prices, with our latest Real Estate 360 survey* of over 270 business leaders in real estate highlighting economic uncertainty and taxation as the two biggest barriers to investment. The rise in unemployment to 5.2% in December, paired with 0.1% GDP growth for Q4 of 2025 further underpin these concerns.
“However, there is cause for buyers to feel more positive about the future market. The latest UK inflation figures revealed a fall to 3%, paving the way for further interest rate cuts this year. Two thirds (65%) of the Real Estate 360 respondents were optimistic about the future of the industry over the next 12 and 36 months, with expectations for residential house prices for 2026 slightly higher than most forecasts at 4%. Additionally, sustainable rental growth was 3.5% in the UK for the year to January 2026 and 8.0% in the highest region, the North East.
“However, there remains significant concern that the Government’s target to build 1.5m new homes by 2029 will not be met. Our survey found 39% of respondents believe viability around cost of development was the biggest barrier to meeting targets, with abolition or possible reform of SDLT being the most popular incentive the government could enact to improve viability.
“London continues to be the region with lowest annual house price growth at -1%. Pressure on prices and costs of development have meant that residential development in London has virtually stopped, and this will only be reversed if developments become viable again. The sector urgently needs the Government to review planning reforms and tax policy to enable this.”
Marc von Grundherr, director of Benham and Reeves: “The latest figures show that the UK housing market finished 2025 in reliably steady fashion, with annual growth remaining positive despite a slight seasonal monthly adjustment.
“London continues to trail in percentage terms, but at an average of over £551,000, the London market is hardly on its knees.
“The capital historically lags behind the rest of the UK when it comes to market adjustments and a return to positive growth, but when the tide turns in London, it turns quickly and so we expect a return to upward price appreciation sooner, rather than later.”
