Research from Rightmove found average new seller asking prices dropped by 1.8% in December, with the national average now at £358,138.
This means prices at the end of 2025 are 0.6% lower than at the end of 2024.
Rightmove expects a 2% rise in asking prices in 2026, as improved affordability and choice support a stronger market.
There was a bigger than usual Boxing Day bounce expected, as buyers who paused for the Budget are set to rejoin the market.
Early signs showed a 24% weekly rise in top-end London sellers after the Budget.
The number of new sellers in the first half of 2025 was up 9% on the previous year, but 4% down in the second half, with buyer demand 3% ahead in the first half and 6% behind in the second.
Sales agreed were up 3% in 2024.
Average mortgage rates fell, with the average 2-year fixed at 4.33% compared to 5.08% last year.
Lower prices, higher wages and easier lending are expected to drive a rebound in 2026.
By sector, first-time buyer (FTB) prices sit at £221,950, down 1.4% month-on-month.
Second-steppers are at £334,297, down 1.8%.
Top of the ladder prices are at £642,131, down 2.4%.
Colleen Babcock, property expert at Rightmove, said: “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.
“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.”
Babcock added: “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.
“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.
“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.”
She said: “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.
“A more stable 2026 would be good for buyer confidence, which in turn would further boost activity levels, leading to a modest price increase.”
Reaction:
Mary-Lou Press, president of NAEA Propertymark:
“Economic and political uncertainty has weighed on confidence in the second half of the year, with sellers adjusting asking prices and some buyers choosing to pause their home-moving decisions.
“The larger-than-usual seasonal price fall reflects this caution rather than a lack of underlying demand.
“Affordability has improved compared to a year ago, helped by lower mortgage rates, rising wages, and greater choice for buyers.
“This has supported overall transaction levels, with sales agreed remaining higher than in 2024, despite the slowdown later in the year.
“The early signs of renewed activity following the Budget, particularly at the top end of the London market, suggest confidence is beginning to return.
“As we move into 2026, a more stable outlook, improved borrowing conditions, and clearer tax policy should help drive a post-Christmas rebound in activity, pointing towards a market more in line with the stronger first half of 2025 rather than the subdued second half.”
Tomer Aboody, director of MT Finance:
“With the Budget now over and done with, the uncertainty and hesitancy is also over and buyers are ready to make their move.
“Despite a lot of negative speculation beforehand, the Budget left the property market mostly unscathed.
“With sellers coming to the market and buyers potentially ready to pounce, as well as lower mortgage rates, the scene looks set for a bounce at the start of 2026.
“With the money markets expecting another base rate cut, the improved affordability this will bring will encourage movement – and the market certainly needs that encouragement.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“Our experience of the post-Budget period doesn’t chime with Rightmove’s but perhaps that’s because the UK’s largest property portal measures asking for aspirational prices rather than values.
“On the ground, we’ve noticed many buyers and sellers have been sitting on their hands, fearing the worst from the Chancellor, before deciding whether to act.
“The damp squib of a Budget has heartened those in the more price-sensitive £500,000 to £1 million bracket who are breathing a sigh of relief.”
“Those in and around the ‘mansion tax’ levels are generally proving more cautious and not contemplating moves unless circumstances dictate – or at least further details of charging emerge.
“As a result, we expect a two-tier market to develop in the early New Year with demand gradually increasing for smaller homes particularly if base rate is reduced sooner rather than later.
“We generally find Boxing Day generates a lot of enquiries of which a significant proportion are of relatively poor quality.”
“We prefer to judge how the next quarter at least is likely to work out when we’ve had a chance to assess the motivation of the fresh crop of buyers – as well as the sellers.
“Values will be determined by affordability and the amount of appropriately priced stock in the most sought-after ranges.”
