House prices undershot expectations in 2025 thanks in part to months of tax hike rumours leading up to the Budget.

Falling mortgage rates combined with lower inflation had many speculating at the start of the year that house prices would rise. 

In the end, they edged up - but only very slightly, and many locations around the country still saw falls. 

The price of the typical home went up by 1.7 per cent in the year to October, according to the most recent figures from the Office for National Statistics. 

This amounts to a rise of about £5,000, taking the price of the average property to £269,892.

The ONS figures run on a delay compared to other house price indexes, but are considered more accurate because they are based on completed sales. 

Other measures paint a similar picture in the final two months of the year, however.  

According to Halifax, house prices went up by 0.7 per cent or £2,000 on average in the year to the end of November, the weakest annual growth since March 2024.

Meanwhile, Nationwide says that compared to this time last year, house prices are 1.8 per cent higher.

Zoopla says house prices went up by just 1.1 per cent in the 12 months to November and now stand at £270,300, lower than the 1.9 per cent increase over 2024 and well below the 3.8 per cent annual average over the last 10 years.

The slowing house price growth this year was driven by falls in London and the South of England. 

The average price in the capital is now £547,468, according to the ONS, 2.4 per cent below what it was a year ago.

Flats have also suffered, with the average price falling to £192,892 according to ONS data, which is 2.6 per cent lower than it was a year ago.

Experts say this is partly because first-time buyers are purchasing later in life and want to skip the apartment stage and go straight to a house, as well as concerns about leasehold properties.  

In contrast, the average semi-detached house in the UK has risen in value by 4 per cent year-on-year from £265,132 to £275,656. 

Looking ahead to 2026, many are forecasting house prices to rise next year.

We look at the different forecasts for house prices next year, and assess the factors weighing on the market.

What the mortgage lenders say...

NATIONWIDE 

• 2026 prediction: 2% to 4% rise

Previous forecasts 

• 2025 prediction: 2% to 4% rise
• 2024 prediction: 0% to 2% fall
• 2023 prediction: 5% fall 

Britain's biggest mutual has predicted average house prices will grow between 2 per cent and 4 per cent in 2026.

In cash terms, the average property is worth £272,998, based on Nationwide's own mortgage lending data. 

A 4 per cent rise would see £10,919 added to the price of the typical home. 

Meanwhile, the more conservative 2 per cent estimate would see it rise £5,459. 

Robert Gardner, chief economist at Nationwide said: 'Looking ahead, we expect housing market activity to strengthen a little further as affordability improves gradually via income growth outpacing house price growth and a further modest decline in interest rates.'

HALIFAX 

• 2026 prediction: 1% to 3% rise

Previous forecasts 

• 2025 prediction: 0% to 3% rise
• 2024 prediction: 2% to 4% fall
• 2023 prediction: 8% fall 

Halifax has forecast a small increase in average house prices next year.

Amanda Bryden, head of Halifax Mortgages, said: 'Looking ahead to 2026, we expect house prices to rise modestly. 

'While wage growth is expected to slow and unemployment may edge higher, lower interest rates and easing inflation should help to gradually improve homebuyers’ purchasing power.'

What the property portals say...

RIGHTMOVE

 2026 prediction: 2% rise

Previous forecasts 

• 2025 prediction: 4% rise 
• 2024 prediction: 1% fall
• 2023 prediction: 2% fall 

Unlike other predictions, Rightmove tracks asking prices, rather than the price homes are sold for. 

Asking prices ended the year 0.6 per cent down this year, and Rightmove predicts that they will rise by 2 per cent next year.

Its experts think lower-priced Scotland, Wales and the north of England will see prices rise next year, while London and the south of England are expected to lag behind.

Its experts also expect things to be more sluggish at the top-end of the market next year, though there is a degree of post-Budget relief as tax rises were not as wide-ranging as expected. 

Colleen Babcock, a property expert at Rightmove says: 'We expect many of those who put their moving plans on hold over the last few months will pick them back up again from Boxing Day and into the new year, now the Budget is out the way. 

'We predict the market will look and feel very different depending on which area of Great Britain you’re in, and the type of property you’re looking to sell or buy, with big differences particularly between the south of England and the rest of Great Britain. 

'The market conditions next year will favour typical first-time buyers over those at the top-end of the market.'

ZOOPLA 

2026 prediction: 1.5% rise

Previous forecasts 

• 2025 prediction: 2.5% rise
• 2024 prediction: 2% fall
• 2023 prediction: 5% fall 

House prices are projected to increase by 1.5 per cent over 2026, according to Zoopla.

It says they will continue to rise at an above-average pace, over 2.5 per cent, across the Midlands, northern England, Scotland and Northern Ireland in 2026, largely because homes are more affordable here. 

Richard Donnell, executive director at Zoopla said: 'We expect a stronger than usual start to 2026 as buyers return to the market. 

'The appetite to move home remains strong but affordability remains a constraint for those buying their first home or looking to trade-up to a larger home which will keep prices in check.

'There remains plenty of homes for sale, which will boost buyer choice as we start the new year.

'It is important that sellers remain realistic on pricing to secure sales in 2026, especially across southern England.'

What the estate agents say...

CHESTERTONS 

2026 prediction: 2% rise

• Previous forecasts 

• 2025 prediction: 3.4% rise 
• 2024 prediction 0.3% fall
• 2023 prediction: 1% fall 

London estate agent Chestertons forecasts that property prices will rise by around 2 per cent across the UK next year.

Expected interest rate cuts and increased clarity around taxes following the Autumn Budget should support home movers, it says, although gains are likely to be capped by weak economic growth and subdued buyer confidence.

Rising uncertainty over employment, combined with only modest real pay growth, has encouraged households to take a more measured approach to spending and property decisions, Chestertons thinks.

The estate agent has seen buyer numbers fall 11.4 per cent year-on-year in 2025, reflecting a more cautious and considered approach among buyers.

It says the fate of house prices next year will be dependent on whether general consumer confidence improves, and whether the Government can avoid the kind of damaging Budget speculation we have seen in 2025, when the time comes for its 2026 fiscal event. 

HAMPTONS 

• 2026 prediction: 2.5% rise

Previous forecasts 

• 2025 prediction: 3% rise
• 2024 prediction: 0%
• 2023 prediction: 0% 

Hamptons is forecasting house prices will rise by 2.5 per cent on average in 2026, supported by the continuing downward trend in interest rates.

'We think inflation is likely to fall faster than anticipated next year, allowing for two or three base rate cuts,' said Aneisha Beveridge, head of research at Hamptons.

'We expect the bank rate to settle at around 3.25 per cent by the end of 2026, with typical mortgage rates stabilising at around 4 per cent. 

'This should improve the availability of sub-4 per cent mortgage deals, even for borrowers with smaller deposits, helping to support price growth and activity.

'Affordability is improving on paper, with earnings growth running ahead of inflation. While some households rolling off shorter fixed-rate deals are seeing lower monthly payments, others are still adjusting to higher costs.

'Against this backdrop, we expect modest growth, with stronger growth in the Midlands and North where affordability is less stretched.'

SAVILLS 

2026 prediction: 2% rise

Previous forecasts 

• 2025 prediction: 4% rise
• 2024 prediction: 3% rise
• 2023 prediction: 10% fall 

Savills says that weaker buyer confidence and concerns about the economy will keep prices in check in 2026. 

House prices are expected to finish this year just 1 per cent higher than when they started, according to the estate agent, before rising 2 per cent in 2026. 

However, thereafter prices should start to pick up again, it says, with a 4 per cent increase forecast for 2027 and a 5 per cent rise in 2028. 

This is based on what Savills calls the 'mainstream market.' The data applies to second-hand homes, not new-builds, and is weighted towards properties being bought with mortgages.

'Our previous forecast assumed falling interest rates would boost borrowing and investment, supporting house price growth,' says Lucian Cook, head of residential research at Savills.

'However, with inflation stuck at 3.8 per cent, economists are less confident about the pace in which rate cuts will happen.

'Higher interest and mortgage rates next year, as well as a weaker labour market, with a slight rise in unemployment and slowing wage growth, are likely to constrain price growth.'