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Prices for UK homes dropped for the second month in a row as market saturation, a new taxation scheme, and uncertainty linked to November’s state budget put downward pressure on costs.
Average asking prices for newly listed homes across the UK fell by 1.8% in the four weeks to 6 December, coming to £358,138 (€407,972). That was after facing a previous 1.8% drop to £364,833 (€415,599) in November, according to Rightmove, an online platform used by UK residents to search for homes to buy or rent.
This larger-than-usual December drop means that prices are 0.6% lower year-on-year, a real decrease of £2,059 (€2,345).
“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,” explained Colleen Babcock, a property expert at Rightmove.
The Stamp Duty Land Tax (SDLT) is a tax that you pay if you buy property or land over a certain price in England and Northern Ireland, due within 14 days of the purchase. The rate of the stamp duty usually changes in late March.
“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 continued.
The expectation of property tax rises before the approval of November’s budget contributed to more subdued activity and pricing.
The number of new sellers coming to market in the first half of 2025 was 9% ahead of the first half of 2024, which reversed to 4% below 2024 over the second half of this year.
Buyer demand was 3% ahead of 2024 across the first half of the year, but 6% behind in the second half.
“It’s still been a more positive year overall for sales, with the number of sales agreed 3% higher than in 2024,” the report from Rightmove indicated.
The drop in prices could help first-time buyers to purchase homes in early 2026, a trend which could reverse in the second half of the upcoming year, with Rightmove predicting that new seller asking prices will rise by 2%.
The average two-year fixed mortgage rate is now 4.33%, compared to 5.08% last year.
The Budget introduced a High Value Council Tax Surcharge (“mansion tax”) on residential properties in England valued at £2 million or more, which will take effect in April 2028.
The charge will start at £2,500 (€2,847) and rise progressively to £7,500 (€8,543) for properties worth £5 million and above.
“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 kickstart the year,” Babcock concluded.
