House prices in the UK dipped sharply in December, with the average asking price for new listings dropping by £6,695, or 1.8%, bringing the national average to £358,138. According to Rightmove, the dip reflects seasonal patterns but also reveals deeper market hesitation driven by affordability concerns and budget-related uncertainty.
But there’s growing optimism in the air. With a widely expected interest rate cut from the Bank of England around the corner, many believe the property market could soon bounce back, especially as the traditional Boxing Day search surge approaches.
Drop
A December slowdown in property prices is nothing new, but this year’s 1.8% drop is steeper than the 10-year average of 1.4%. Buyers and sellers alike held off amid months of speculation surrounding potential property tax changes before the November budget.
The result? An end-of-year dip that has pushed 2025’s market performance into negative territory, despite stronger activity earlier in the year.
The South West saw the steepest regional drop at -2.7%, while London remained flat. Interestingly, the North West bucked the trend with a 2.6% annual rise, showing some regions were more resilient than others.
Surge
Despite this lull, property professionals are preparing for what they call the “Boxing Day Bounce.” Rightmove expects a rush of new listings and buyer interest immediately after Christmas, with a forecasted 2% increase in new seller asking prices in 2026.
Why Boxing Day? It’s become a tradition. Once the festivities wind down, house hunters head online, imagining a fresh start in a new home for the new year.
Colleen Babcock at Rightmove explained it best: “With the turkey and trimmings barely off the table, people head straight to Rightmove to browse fresh listings and imagine how different next Christmas could look.”
Rates
Fueling the optimism is the strong possibility of a base rate cut from the Bank of England. Financial markets currently price in over a 90% chance that the BoE will reduce the base rate from 4% to 3.75% this week.
This would mark the lowest rate in nearly three years and the first time it has started with a “three” since February 2023 — right before rates climbed to curb inflation.
A rate cut would make mortgage deals more attractive, boost affordability, and reignite buyer confidence — all ingredients for a healthier housing market heading into 2026.
Activity
Rightmove’s data shows that both buyers and sellers were cautious in the second half of 2025, influenced heavily by pre-budget jitters. Around 20% of movers surveyed admitted to delaying their plans until after the budget.
In London, where tax speculation was especially intense, new seller listings jumped 24% in the week following the budget compared to the week before — a strong sign of pent-up demand being released.
Matt Smith, Rightmove’s mortgage expert, pointed out that lower mortgage rates will help start 2026 on a more positive note: “We’re expecting to end the year with a bank rate cut, which would be good for confidence heading into the Boxing Day Bounce.”
Recovery
So, what’s the outlook for 2026? Experts are cautiously optimistic.
Rightmove predicts that 2026 will mirror the stronger first half of 2025 rather than the sluggish second half. Improving affordability, stable rates, and a more predictable political climate should encourage more activity.
The average two-year fixed mortgage rate has already fallen to 4.33% from 5.08% a year ago. Combined with easing inflation and stronger wage growth, many households may find themselves in a better position to buy.
However, pricing realistically will remain critical. Jordan Halstead, CEO at Jordan & Halstead Estate Agents, highlighted that homes priced fairly are still selling — but over-inflated listings continue to sit on the shelf.
Trends
The market in 2025 told two very different stories: a busy, confident first half followed by a cautious, hesitant second half.
- New seller numbers: +9% in H1, -4% in H2
- Buyer demand: +3% in H1, -6% in H2
- Sales agreed: +3% for the full year vs. 2024
Claire Reynolds at Strutt & Parker noted that the mood shifted almost instantly once the budget was announced. And with some economic certainty returning, sellers and buyers alike are expected to re-engage with the market.
With the BoE expected to cut rates and affordability gradually improving, 2026 could be the year the market regains its momentum — as long as sellers stay grounded with pricing and buyers remain confident that the worst of the volatility is behind them.
FAQs
How much did house prices fall in December?
Prices fell by £6,695 or 1.8% on average in December.
What is the Boxing Day Bounce?
It’s a surge in property searches and listings after Christmas.
Is a Bank of England rate cut expected?
Yes, markets expect a cut from 4% to 3.75% this week.
What’s the forecast for 2026 house prices?
Rightmove expects a 2% rise in new asking prices.
Are mortgage rates getting cheaper?
Yes, average two-year fixed rates dropped to 4.33%.
