Prices expected to rise between 1% and 3% this year
The Bank of England’s latest base rate cut and an increasing number of lending options are among a variety of forces “posed to somewhat buoy” the housing market this year, according to Halifax.
In its latest house price index, the bank reported that the average property price stood at £297,755 as the market entered the new year, following a drop of 0.6% in December.
Despite the average property price standing at its lowest level since June, Halifax’s head of mortgages, Amanda Bryden, painted a picture of activity for the year ahead.
She said December’s monthly fall in prices was “likely related to uncertainty in the latter part of the year” and that “this should now be starting to unwind”.
“Various forces are poised to somewhat buoy the market heading into 2026,” she said.
“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”.
Nevertheless, she noted headwinds that could affect buying power, including the slowing of wage inflation and flattening employment rates. Halifax is predicting a modest rise in house prices of between 1% and 3% across 2026.
December’s figures also showed that annual growth had slowed to 0.3%, down from 0.6% in November.
Bryden said that while this could feel like a “subdued” close to the market in 2025, overall activity levels across the year were “broadly in line with the pre-pandemic average”.
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