This week was a week of reflection. You name it, everyone came out to say, basically, the same thing. More affordable regions prospered while more expensive regions predominately in the capital and the south withered at the top end of the market under budget speculation and the weight of increased mortgage payments. This has them all looking to the New Year where they anticipate moderate growth, off the back of further rate cuts but reduced transactions now there is no stamp duty holiday to make. Welcome to another UK Property News Recap – 19.12.2025
Rightmove banks on Boxing Day bounce
2025 was a year of two halves. The first half saw a burst of activity from the lower end of the market from buyers trying to complete before the stamp hold threshold of 0% fell from £425,00 to £300,000. However, as the year progressed, sales began to slow as the economic environment became increasingly unsettled but first time buyers, after a short period of adjustment, remained set on moving onto the first rungs rather than waste another year on rent. As a result, according to Rightmove, prices are 0.6% (or £2,059) lower at the end of 2025 than in 2024 but agreed sales were up 3%.
Ending the year, budget concerns, especially at the top of the market, have resulted in average new seller asking prices falling by 1.8% (-£6,695) this month to £358,138. Moving forward, the portal foresees prices rising 2% over the course of the year off the back of interest rates reducing, enabling further price growth at the lower end of the market.
First time buyers made their move in 2025
According to analysis from Savills, first time buyer lending increased by 30% on the previous year in the year to September 2025. This was predominantly due to the stamp duty rush at the start of the year to complete before the threshold fell from £425,000 to £300,000 in April. However as interest rates began to reduce, first time buyers were keen to press ahead; affordability permitting, This was very apparent in Northern regions where prices were within reach, however the increase in activity has driven house price growth in these areas where other regions have lagged or slipped behind.
Despite this the largest part of the market continues to be dominated by cash purchases, with an estimated 397,000 cash buyers spending approximately £147.6bn in 2025. Some are taking advantage of discounted prices and others are getting help from those in the family with deep pockets.
The UK Property Market’s resilient year
Reflecting on the year, Nationwide felt the UK housing market had shown “resilience” in the face of economic uncertainty and a stamp duty holiday coming to a close. First time buyers were actively looking to move out of the rental market and onto the ladder as affordability improved courtesy of rate falls and wage increases. This has meant price growth may have slowed from 4.7% in 2024 but it did still trudge, however reluctantly, forward by 2.1% in 2025. Northern Ireland saw the most significant growth averaging 11% in the first nine months of the year but still remains around 6% below the all-time high recorded in 2007. London was hit the hardest, only managing on average 1.3% growth in the first nine months of the year while the Northern Regions along with Wales saw significant growth off the back of first time buyers competing for more affordable homes and investors focused on high yields.
Moving forward, the lender is banking on interest rates falling further, galvanising the market creating annual house price growth in the 2 to 4% range next year.
Banking on future interest rate cut to boost house price growth
Musing on the year as it comes to a close, Halifax was largely aligned with Nationwide. The stamp duty holiday aside, the year maintained a level of consistency. The average UK home is now, on Halifax’s index, worth £299,892, up just +0.7% over the year. Looking ahead, the lender expects house prices to rise modestly, buoyed by interest rate falls to somewhere between 1% to 3%. This will again be more notable in more affordable regions and less pronounced in others where tax increases are due and affordable constraints remain.
Property transaction figures expected to decline in 2026
UK Finance released their lending predictions for 2026. Overall gross lending is expected to rise by 4% to £300 billion. However property transactions are to reduce by 10,000 when compared to 2025. Meanwhile 1.8m come face to face with higher mortgage rates as their term comes to a close. Despite this they remain upbeat that arrears will decrease by 5% but for those already in trouble more lies ahead. The trade association is predicting a 9% increase in 2026 to 9,400.
London apartments take a beaten
The absence of international buyers who propped up pockets of the London market creating a false level of pricing is hurting developers and sellers. This alongside increased taxes and the constant stream of negative press around cladding issues, leasehold’s, excessive service charges and bad management has seen London flats prices fall, making them more affordable than they once were but not overly desirable.
Risking planning
The risk of flooding and how insurable a home is because of its “risk” fact will become a major issue in the not-so-distant future. In the meantime, while money is tight, the government will continue to build, prioritising numbers over future risks. As a result a report by Aviva found, 115,000 of the government’s planned 1.5 million homes will be in the highest-risk flood zones.
The Bank of Mum and Dad gets drawn on for a second time
A survey conducted by Barclays found 19 per cent of those buying their second home, were getting financial support, with average loans or gifts of more than £81,000. This compares to 30% of first time buyers, demonstrating how reaching at whatever level is a stretch today.
UK House Prices remains unmoved
According to Acadata HPI house price movement overall in England and Wales remained unmoved as buyers and sellers waited for budget clarity. As with the rest of the indices, growth over the year was reserved for more affordable or northern regions while the Capital and the South East continued to struggle to make any headway. This pattern is likely to continue through into 2026 with rate cuts facilitating more movement at the lower end especially while those properties at the top face heavy negotiation now they face increased annual taxation.
UK House price growth is dominated by Northern regions
Average UK house price growth is ESTIMATED by the ONS to have reduced down from 2% in September to 1.7% in October making the average home now worth £270,000. Any growth in England was led by activity in the North East, up 5% annually while prices in London fell by 2.4%. Affordability dictating activity and demand in regions.
UK Rental price growth slows
Rental growth continued to slow in November 2025 but renters were bereft of any relief as the average UK monthly private rent rose 4.4%, to £1,366. Northern Ireland and Wales saw the steepest annual rises up 6.4% and 6.1% respectively while Scotland saw the lowest annual rise of 3.3% as affordability squashed further rises, at least in the short Christmas term.
Owner Occupiers’ Housing Cost fall
The annual contribution from owner occupiers’ housing costs fell for the 10th consecutive month in November. Rents and Water costs fell while electric and gas prices crept up. Overall though the annual contribution from OOH was 0.77 percentage points in November as opposed to 0.81 percentage points in October.
First time buyers driven northern growth
Today Zoopla reflected on the year almost gone. Despite all the upheaval, transactions rose to 1.2m while price growth was limited to 1.1%. Economic uncertainty and budget speculation weighing heavily on any signs of life.
First-time buyers were actively on the move, accounting for 2 in 5 sales as affordability improved. This enabled existing homeowners buying a home with a mortgage to step up, accounting for 1 in 3 sales while cash purchases made up 1 in 5 sales.
Northern, and more affordable regions boosted house price growth, narrowing but not closing the gap between the South where prices fell.
Buoyed by falling interest rates, Zoopla predicts house price growth of 1.5 per cent over 2026 but housing transactions to fall 2% to 1.18m due to the stamp duty incentive that drove sales at the start of 2025 being removed.
Rate cut
The Bank of England’s Monetary policy committee voted 5 to 4 to cut rates by 0.25% making the base rate now 3.75%, Many a lender had anticipated this move and trimmed off the fat of their products before today so the benefit is already being felt with more hoped for. What this will do is instil hope and encourage buyers and sellers that 2026 will be a better year financially to move. The former due to increased affordability and the latter that they may get closer to the price they want. This will greatly depend on their initial price point, the lower end seeing prices rise faster while the top end will experience the reverse. For the 1.8m due to remortgage on a different rate they will be relieved to have avoided rates of 5+% but hoping for further cuts before they sign.
Higher stamp duty on second homeowners and investors increased revenue by 19%
Investors rushed to meet their stamp duty deadline to avoid paying a 5% surcharge instead of 3% at the end of 2024, driving residential stamp duty receipts to “£10.4 billion in 2024-25, up 21% from £8.57 billion the year before.
Rental prices remain consistent
According to Foxtons average rental prices declined in the Capital by 4% in November, settling at £551 per week, typical for the time of year as demand wanes. Over the course of the year rents increased 2% with the exception of North London where prices remained static. Studio flats fell out of favour, budgets declining by 17% year-on-year, while slight increases were recorded for one-, two-, and three-bedroom properties while stock levels continued to fall.
That concludes this week’s UK Property News Recap – 19.12.2025. Please get in touch if you have any comments or suggestions.
