Catenaa, Saturday, January 17, 2026-UK house prices fell by up to 0.6 percent in December, but experts predict stabilization and modest growth in 2026 as market uncertainty eases and mortgage conditions improve.
The Halifax price index shows the average home now costs £297,755, a 0.3 percent increase over the past year, following a small 0.1 percent drop in November.
The recent declines reflected caution among buyers and sellers amid speculation over property tax changes ahead of Chancellor Rachel Reeves’s autumn Budget.
Analysts say the less severe tax measures and improved monetary conditions are likely to restore confidence.
Mortgage rates have fallen dramatically since August 2024, aided by six interest rate cuts. Further reductions may follow as the Bank of England maintains a relaxed stance on monetary policy, noting that inflation has peaked.
This creates opportunities not only for first-time buyers but also for around 1.8 million homeowners refinancing short-term fixed-rate deals in 2026.
London remains an exception, with prices flat or falling during 2025. The city’s most expensive postcodes saw double-digit declines, while wider affordability improvements have lowered the house price-to-income ratio to its lowest level in over a decade.
Analysts highlight increased buyer activity driven by lower rates, higher wages, and wider choice in available properties.
Industry experts forecast overall house price growth reaching around 3 percent by year-end, supported by renewed buyer confidence and ongoing demand.
Pent-up interest from first-time buyers and those previously paused by uncertainty is expected to sustain market momentum.
Despite recent drops, the UK housing market is entering 2026 with clearer conditions and potential for steady, measured growth.
