UK house prices slide £6,695 as anticipation builds over interest rate cuts

The average asking price for newly listed properties fell by 1.8% in December, or £6,695, bringing the average to £358,138, as budget-related uncertainty weighed on activity, according to Rightmove.

However, the property site expects the market to rebound sharply over the Christmas period, with a larger Boxing Day surge in searches and new listings anticipated and a 2% rise in new seller asking prices forecast for 2026.

Alongside this optimism, the Bank of England’s (BoE) widely anticipated interest rate cut this week is expected to further buoy the property market. A reduction in rates would likely lead to more attractive mortgage deals, potentially revitalising buyer sentiment.

Financial markets are pricing in a greater than 90% probability that the BoE will announce a rate cut this Thursday, according to Laith Khalaf, head of investment analysis at AJ Bell. A cut would lower the base rate from its current 4% to 3.75%, the lowest level in nearly three years.

“The last time the base rate began with a ‘three’ was on February 2, 2023, just before the Bank hiked rates to 4% in response to rising inflation,” Khalaf said.

Prices typically soften in December, but this year’s decline exceeded the 10-year average fall of 1.4%, leaving 2025 ending slightly lower overall despite stronger conditions earlier in the year. The North West recorded the strongest annual performance at +2.6%, while London was flat and the South West saw a 2.7% drop.

Rightmove believes the slowdown reflects months of rumoured property tax changes ahead of the November budget, which discouraged both sellers and buyers. Nearly 20% of more than 10,000 potential movers surveyed said they had delayed their plans until after the budget. A wave of those stalled listings is now expected to be released onto the platform from Boxing Day onwards.

“The market will soon benefit from the traditional boost in home-moving activity from Boxing Day. Rightmove’s Boxing Day Bounce is an annual event where we see many begin or resume their plans to move after the distraction of Christmas,” said Colleen Babcock, property expert at Rightmove.

“With the turkey and trimmings barely off the table, each year we see people heading straight to Rightmove to browse the fresh listings for sale and imagine how different next Christmas could look.”

In London, where speculation about higher-end property taxation was more pronounced, the number of new sellers increased by 24% in the week following the budget compared to the week before.

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Rightmove anticipates that 2026 will resemble the more active first half of 2025 rather than the slow second half, underpinned by improving affordability and ample supply.

“Lower price growth supported buyer affordability and drove activity in the first half of the year, even after the April stamp duty deadline in England,” Babcock said. “In the second half of 2025, uncertainty caused by rumours of property tax changes in November’s budget swirled, some from as early as August. This had an impact on pricing and activity, as sellers tried to entice nervous buyers.”

The average two-year fixed mortgage rate has fallen to 4.33% from 5.08% a year ago, and lenders have been easing criteria following regulatory changes earlier in the year. Rising wages and easing inflation in 2025 are expected to further support affordability in 2026.

“With market conditions supporting higher levels of activity, and a hopefully more certain economic environment, we forecast a better year for price growth in 2026 with a strong rebound in activity to kick start the year,” Babcock added. “However, with buyer choice remaining high, sellers will still need to come to the market at tempting prices to attract attention and do all that they can to ensure that their property is presented as well as possible.”

New seller numbers were 9% higher in the first half of 2025 compared with 2024, but 4% lower in the second half. Buyer demand followed a similar pattern: 3% up in the first half but 6% down in the second. Even so, total sales agreed for 2025 were 3% higher than those of the previous year.

Matt Smith, Rightmove’s mortgage expert, said: “We’re expecting to end the year with a bank rate cut, which would be good for confidence heading into the Rightmove Boxing Day Bounce.” He added that home movers would enter 2026 with cheaper average mortgage rates than at the start of 2025.

Claire Reynolds, UK head of sales at Strutt & Parker, said: “The weeks of speculation leading up to the autumn budget certainly cooled the property market, especially for those making discretionary moves. However, the mood shifted almost instantly once the day finally arrived.”

Jordan Halstead, CEO at Jordan & Halstead Estate Agents in Chester, added: “2025 has felt like two different markets. The first half was busy and focused, but the last quarter slowed down as buyers and sellers paused to see what might come out of the budget. Deals haven’t dried up, but people have taken longer to commit.

“Properly priced homes are still selling, the ones that have struggled have been the over-optimistic instructions. Buyers will pay fair value; they just won’t chase fantasy prices. Looking ahead, I think 2026 will be steady with small rises. Once the political uncertainty of the budget has cleared and people feel confident that rates are stable, the market will start moving more freely again.”

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UK house prices slide £6,695 as anticipation builds over interest rate cuts

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