The UK housing market is poised for a return to calmer conditions next year, following a turbulent 2025 that saw average property prices drop by around £2,000.
Market Stalls Amid Tax Speculation
According to the property portal Rightmove, the average asking price for a home in the four weeks to 6 December was £358,138. This figure represents a fall of 0.6 per cent, or £2,059, compared to the same period last year. This decline marks a stark contrast to 2024, when prices rose by approximately £5,000.
The primary driver behind this year's dip has been widespread uncertainty, particularly in the run-up to the Autumn Budget. After an initial flurry of activity linked to the end of a stamp duty holiday, the market grew notably quieter from spring onwards.
Speculation about potential new property taxes began as early as August, four months before the Budget. Rumours included a possible annual levy on homes valued above £500,000, potential reforms to council tax and stamp duty, and higher taxes for landlords.
Confidence Shaken, Prices Adjusted
Mary-Lou Press, president of the National Association of Estate Agents, confirmed that "economic and political uncertainty has weighed on confidence in the second half of the year." She noted that this caution led to sellers adjusting their asking prices and some prospective buyers deciding to pause their moving plans.
"The larger-than-usual seasonal price fall reflects this caution rather than a lack of underlying demand," Press added, suggesting the market fundamentals remain sound.
Stability and Growth Predicted for 2026
Estate agency group Jackson-Stops forecasts a return to normality in 2026, with prices across the UK's mainstream market expected to increase by between 2 and 3 per cent.
Nick Leeming, chair of Jackson-Stops, stated: "The first quarter of the year is set to be particularly busy, driven by pent-up demand that built ahead of the Budget and is expected to carry through into next year, reinforcing a spring bounce that should be more pronounced than the long-term norm."
This anticipated recovery, dubbed an unexpected 'Reeves rebound' following the Budget, is expected to be supported by several factors:
- Interest rates settling in the mid-three per cent range.
- Easier access to mortgages for buyers.
- Higher wages improving overall affordability.
Leeming concluded: "Following almost six years of exceptional volatility driven by Covid, fiscal shocks and political uncertainty, 2026 is now expected to mark a return to a more stable and recognisable housing market."
