House prices in the UK dropped by 0.6% month-on-month in December, following a decline of 0.1% in November, Halifax has revealed.

The bank’s latest house price index found that the average property price stood at £297,755 last month, the lowest price since June when prices averaged £297,157.

Annual house price growth slowed to 0.3% in December, following an increase of 0.6% in November.

Head of mortgages at Halifax, Amanda Bryden, said that while it may feel like a subdued close to the housing market in 2025, overall activity levels were "resilient" over the year and in line with the pre-COVID average.

She added: "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.

"Further, mortgage rates are already reducing following the latest base rate cut and there are an increasing number of lending options available for those borrowing at a higher loan-to-value.

"While affordability pressures persist, the house price to income ratio was at its lowest in over a decade in December, striking a positive note for those looking to purchase their first home."

Northern Ireland continued to be the strongest performing nation or region in the UK, with average property prices jumping by 7.5% in the last year to £331,062.

Prices in Scotland (£217,775) and Wales (£230,223) increased by 3.9% and 1.6% respectively.

In England, the North East saw the highest annual growth rate, as prices rose by 3.5% year-on-year to £181,798. London property prices dropped by 1.3% in 2025 to £539,086.

Personal finance analyst at Bestinvest, Alice Haine, stated that while the Chancellors’ property tax hikes in November proved less widespread and imminent that initially feared, the uncertainty in the lead up to the Budget had "weighed heavily" on market sentiment.

She concluded: "While rumours of sweeping council tax reform and capital gains tax on high-value residences did not materialise, other concerns were realised with the introduction of a new ‘mansion tax’ at the Budget, via a council tax surcharge on properties valued above £2m, which won’t arrive until 2028.

"A quarter-point rate cut in December, and the possibility of another reduction in February if economic data remains weak, offers some relief for buyers and those refinancing.

"If mortgage rates continue to improve, this will deliver a boost to affordability levels, though buying activity at the upper end of the market may remain subdued, in anticipation of the high value council tax surcharge coming into force in April 2028. Buy-to-let activity could also dampen, with more landlords likely to exit ahead of the property income tax rise in April 2027.

"This could present opportunities for savvy buyers, particularly if sellers are keen to move quickly."

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