Experts are forecasting a gradual increase in house prices next year following a recent slowdown, according to the Halifax mortgage lender. In November, average property prices in the UK nearly stagnated, edging up by a modest £138 to reach a new record high of £299,891, coming close to breaching the £300,000 threshold.
Economists attribute this tepid growth to pre-Budget uncertainties, but with the potential for a Bank of England rate cut in the near future, they anticipate a resurgence in price growth early in 2026.
While national house prices have remained relatively stable, disparities exist among regions. For instance, Northern Ireland saw a significant annual increase of almost 9%, with average property prices reaching £220,716, up from 7.9% in October. The region, home to over 1.9 million people, is experiencing a shortage of housing supply compared to demand, as indicated by a report from Danske Bank revealing the lowest level of planning applications since 2002.
In contrast, Greater London continues to face challenges, with average prices declining by 1% to £539,766 last month.
Across the UK, the yearly price growth rate decelerated notably last month, dropping from 1.9% to 0.7%. Amanda Bryden, the head of mortgages at the Halifax, noted that this was the weakest growth since March 2024, primarily reflecting the base effect of stronger growth in the same period the previous year.
Bryden added that despite the changes in stamp duty earlier in the year and uncertainties preceding the autumn Budget, property values have held steady. While slower growth might disappoint current homeowners, it presents an opportunity for first-time buyers, as affordability, compared to average incomes, is currently at its most favorable level since late 2015.
Looking ahead, with stable market activity and expectations of further interest rate cuts, the Halifax anticipates a gradual uptick in property prices continuing into 2026.
In November, Scotland recorded a 3.7% annual increase in house prices, with average property values standing at £216,781. Meanwhile, in Wales, prices rose by 1.9% year-on-year, reaching £229,430. In England, the North West led in annual growth rate, with property prices rising by 3.2% to £245,070. Despite the decline, London remains the most expensive area in the UK.
Jason Tebb, president of OnTheMarket, highlighted the housing market’s resilience in 2025, noting regional disparities in performance, with stronger growth in the north compared to the pricier south, where affordability poses a greater challenge.
Iain McKenzie, chief executive of The Guild of Property Professionals, emphasized the increased supply of homes compared to the previous year, providing buyers with more options and moderating short-term price growth.
Mortgage expert Karen Noye from wealth manager Quilter pointed out that post-Budget clarity has given borrowers a clearer outlook for early 2026. Affordability remains a key concern, with mortgage pricing sensitive to shifts in swap rates and global economic conditions. Although fixed rates have decreased, progress is gradual, and high living costs limit borrowing power, especially for first-time buyers.
Sarah Coles, head of personal finance at Hargreaves Lansdown, expressed that house prices have been stagnant, with a mere 0.7% increase over the year, falling behind inflation. Uncertainties, including pre-Budget anxieties and labor market weaknesses, have contributed to this stagnation. However, the potential for a rate cut and declining mortgage rates could potentially rejuvenate the market in the new year.
The Halifax data presents the average house prices and annual changes, with regional annual change figures based on the most recent three months of approved mortgage transactions.