UK house prices fell by 1.2% in December 2025, marking the sharpest monthly drop since August 2023, according to Halifax. The decline follows a prolonged period of elevated mortgage rates and reduced market activity.
- UK house prices fell 1.2% in December 2025, the steepest monthly drop since August 2023
- Average home price fell to £274,500, down 3.1% year-on-year
- London and Southeast saw price declines of 1.8% and 1.5% respectively
- Mortgage approvals dropped to 52,000 in December, lowest since 2015
- Housebuilding starts down 9% year-on-year in Q4 2025
- Estate agent instructions fell 17%, conveyancing completions down 12%
UK residential property values experienced their steepest monthly decline in over 16 months, dropping 1.2% in December 2025, data from Halifax indicates. This follows a 0.4% drop in November and reflects a sustained cooling in the housing market driven by persistently high borrowing costs and declining buyer confidence. The average UK home price now stands at £274,500, down from £278,000 in November. This level represents a 3.1% year-on-year decrease, the largest annual fall since early 2023. The decline is particularly pronounced in the south of England, where prices in London and the Southeast fell by 1.8% and 1.5% respectively, compared to a 0.7% drop in the Midlands and a 0.3% decline in Scotland. The downward trend has been fueled by the Bank of England’s base rate remaining at 5.25% for the 12th consecutive quarter, limiting affordability for first-time buyers. Mortgage approvals fell to 52,000 in December, the lowest level since 2015, and the number of homes listed for sale dropped by 8.3% compared to the previous month, signaling reduced market liquidity. The impact is being felt across the property ecosystem: estate agents report a 17% drop in new instructions, while solicitors note a 12% decline in conveyancing completions. The construction sector has also seen softer demand, with housebuilding starts down 9% year-on-year in Q4 2025.