5 December 2025
“The Halifax data shows that house prices remained completely flat in November, leaving annual growth at 0.7% and the average UK home costing £299,892, which is still a record high. The market has not moved an inch in what has been a very static period as many buyers waited for clarity on housing measures in the budget. The dust has now settled post budget, giving borrowers a clearer view of what the early months of 2026 may look like.
Affordability remains the biggest hurdle. Inflation has eased and there is growing expectation of a first rate cut in December, but mortgage pricing is still sensitive to shifts in swap rates and global pressures. Fixed rates have dipped, yet progress is gradual and high living costs continue to limit how far borrowing power can stretch, particularly for first time buyers.
Mortgage activity shows a market that wants to move but is still cautious. Lenders are competing harder at lower loan to value bands, while higher LTV deals remain expensive. Remortgagers rolling off old fixed rates are opting for shorter terms as they wait to see how borrowing costs evolve in 2026. All of this is happening against the backdrop of persistently low housing stock, which continues to support prices and limits the scope for any meaningful correction.
The new mansion tax was only announced last week, so it has had no bearing on this month’s figures and its wider impact is likely to be limited. It may, however, create pressure for some older homeowners who are asset rich but not cash rich and now need to factor in an annual charge.
Whether December's prices show a small rise, a slight fall or continued stability, the story will be much the same. The outlook for 2026 rests on the path of mortgage rates and the resilience of household incomes. Greater clarity post budget and the prospect of lower borrowing costs give the market a firmer footing, but affordability will remain the defining constraint.”
