House prices: What experts say will happen in 2026 after another fall in December
.jpeg?trim=0,0,1,0&width=1200&height=800&crop=1200:800&w=780&resize=780,470&ssl=1 "House prices: What experts say will happen in 2026 after another fall in December")
News that house prices fell by as much as 0.6 percent on average in December could be a worrying headline for homeowners; But most experts believe now is not the time to panic.
Uncertainty about possible property-related tax changes to be announced in Rachel Reeves’ autumn budget has led to an abundance of caution despite falling interest rates and some lenders increasing affordability limits for mortgages.
The latest Halifax price index shows that the average house in the UK is now £297,755; It was up just 0.3 percent from the previous year, following a smaller 0.1 percent drop in November before this latest drop.
.jpeg)
But greater certainty towards 2026, combined with a number of factors that leave buyers still retaining plenty of demand, means experts think prices will stabilize in the short term and start to rise again as the year progresses.
Bestinvest personal finance analyst Alice Haine noted that the political situation had eased and the broader property buying environment now appeared clearer. “While Chancellor Rachel Reeves’ November property tax increases turned out to be less widespread and imminent than many feared, uncertainty in the lead-up to the financial statement has weighed on market sentiment, with some buyers and sellers rushing to complete ahead of the announcement while others paused plans or abandoned them altogether,” he said.
“Mortgage rates have fallen significantly in 2025, helped by six interest rate cuts since August 2024, with further improvements potentially expected after the central bank signaled a more relaxed stance on monetary policy by stating that inflation had already peaked.
“It’s not just first-time buyers who will benefit from improved deals. With nearly 1.8 million fixed deals due to expire in 2026, those refinancing two- or three-year fixes can also benefit from lower repayments.”
Other industry experts largely agreed with this assessment.
Tom Bill, head of housing research at UK estate agents, said: “House price growth effectively evaporated last year as supply increased and demand weakened during months of pre-Budget tax speculation. Now there is greater clarity and mortgage rates continue to fall, we expect stability rather than the feel-good factor in the early months of 2026.”
“Despite the risk of increased domestic political uncertainty, we believe that house price growth should increase to 3 percent by the end of the year.”
Get a free partial share of up to £100.
Capital is at risk.
Terms and conditions apply.
ADVERTISING
Get a free partial share of up to £100.
Capital is at risk.
Terms and conditions apply.
ADVERTISING
Jonathan Hopper, chief executive of Garrington Property Finders, added that London was an exception to the general increase in prices throughout the year.
“In most regions, December’s decline was the lowest point in a year spanning two halves. The exception is London, where prices remained stable or falling throughout 2025; Halifax data shows average prices in the capital fell 1.3 per cent over the year, but we saw double-digit falls in the capital’s most expensive postcodes.
“For buyers, such price corrections are good news. Falling prices, combined with lower interest rates and rising wages, have made homes more affordable, and Halifax’s data shows the house price to income ratio is now at its lowest in more than a decade.”
“With interest rates returning to below 4 per cent and house values in London and the South East looking much better than a year ago, the shackles have finally come off.
“Better value and plenty of choice are attracting buyers, and property portals and estate agents have had a busy start to the year – but prices are likely to gradually return to growth rather than career over the coming months.”
Andrew Montlake of mortgage broker Coreco reiterated his expectation of increased activity, saying he “expects a lot of pent-up demand in January and beyond”, while Ranald Mitchell, director of Charwin Mortgages, added: “Demand hasn’t gone anywhere.”
“When lenders continue to sharpen interest rates and confidence in borrowing costs increases, buyers continue to do so as well.
“And first-time buyers have held their ground. They’re still cautious because affordability is the gatekeeper, but they’re ready to move when the numbers add up. There’s an appetite, but the monthly payment decides.”
