House prices are expected to see gradual growth in the upcoming year following a recent slowdown, as per industry experts. Data released by mortgage provider the Halifax reveals that average property prices saw minimal growth in November, edging up by £138 to reach a new peak of £299,892, nearly hitting the £300,000 mark.
Economic analysts attribute the subdued growth to pre-Budget uncertainties, but with the likelihood of a forthcoming interest rate cut by the Bank of England, they anticipate a rebound in price growth early in 2026.
While national house prices remained relatively stable, certain regions outperformed others, with Northern Ireland experiencing a substantial 9% annual increase in average property prices to £220,716. Conversely, Greater London continued to struggle, with prices declining by 1% to an average of £539,766 last month.
A significant deceleration in annual price growth across the UK was observed, dropping from 1.9% to 0.7% in the latest figures. Amanda Bryden, head of mortgages at the Halifax, noted that this slowdown, the most sluggish since March 2024, is primarily due to the high growth rates seen at the same time last year.
Bryden added that while the market may disappoint existing homeowners with the slower growth, it presents a favorable scenario for first-time buyers. Affordability, in terms of property prices relative to average incomes, is now at its most favorable level since late 2015.
Looking ahead, with the stability in market activity and anticipated interest rate reductions, the outlook suggests a continuation of gradual price growth into 2026.
In November, Scotland recorded an annual house price growth of 3.7%, with the average property value standing at £216,781. Similarly, Wales saw a 1.9% year-on-year increase, reaching an average value of £229,430. The North West of England led the annual growth rate at 3.2%, with property prices averaging £245,070 annually. Despite the drop, London remains the costliest region in the UK.
Industry experts, including Jason Tebb from OnTheMarket and Iain McKenzie from The Guild of Property Professionals, pointed out the regional disparities in market performance. Tebb highlighted the resilience of the housing market in 2025, noting that the north outperformed the south due to affordability concerns.
Karen Noye, a mortgage expert at Quilter, emphasized the importance of post-Budget stability in shaping the outlook for early 2026. She highlighted affordability challenges despite easing inflation and potential rate cuts, cautioning that high living costs could limit borrowing power, especially for first-time buyers.
Sarah Coles, head of personal finance at Hargreaves Lansdown, echoed the sentiment of a sluggish market, citing uncertainties and labor market weaknesses as contributing factors. However, she expressed optimism for a potential market uptick in the new year, driven by expected rate cuts and declining mortgage rates.
Overall, the housing market is projected to see gradual growth in the coming year, with various factors influencing regional trends and buyer behavior.