Homeowners with Lloyds and Halifax woke up to a significant financial shift on Thursday morning, as new data revealed a sharp monthly drop in property values.
December Sees Steeper Price Decline
According to the latest figures from Lloyds Banking Group, which owns Halifax, average house prices fell by 0.6% in December 2025. This follows a smaller 0.1% dip recorded in November. The monthly decline equates to a cash reduction of £1,789 for the typical homeowner.
The data shows the average UK property price now stands at £297,755. This marks the lowest average price point since June of last year. On an annual basis, price growth has slowed to just 0.3%, down from 0.6% in November.
Market Forces and Future Predictions
Amanda Bryden, Head of Mortgages at Halifax, described the close of 2025 as "subdued" but noted overall activity levels had been resilient. She pointed to several factors that could support the market in 2026.
"Mortgage rates are already reducing following the latest Base Rate cut," Bryden stated. She also highlighted that the house price-to-income ratio was at its most favourable in over a decade in December, offering a potential boost for first-time buyers.
Despite persistent affordability pressures, Halifax forecasts a modest rise in house prices of between 1% and 3% during 2026.
Industry Reaction: Seasonal Dip Meets Underlying Optimism
Property experts were quick to contextualise the December figures, largely attributing the drop to seasonal trends and now-resolved political uncertainty.
"A monthly drop in house prices during December may seem like the proverbial lump of coal, but it is simply a case of seasonality," said Marc von Grundherr, Director of Benham and Reeves. He added that the underlying sentiment is now one of optimism, with buyers re-entering the market.
Verona Frankish, CEO of Yopa, agreed, noting that the Autumn Budget uncertainty is now behind us and interest rates have fallen. She reported a notable uplift in market activity as a result.
However, Nathan Emerson, CEO of Propertymark, struck a note of caution. "A modest fall in house prices highlights that affordability pressures are still weighing on the market," he said, pointing to wider economic considerations like inflation that continue to impact buyer power.
