Overall outlook more positive than short term decline in UK house prices suggest
Today's UK House Price Index figures revealed UK average house prices rose by 2.4% in the year to December 2025, with a monthly decrease of 0.7%. The average price of a property in the UK in December was £270,000.
Stacy Eden, Head of Real Estate and Construction at RSM UK, said: “Today’s UK House Price Index reveals a static market, with house prices only 3.6% higher than Jan 2023. Concerns around the Autumn Budget continued to have a clear impact on December prices, with our latest Real Estate 360 survey of over 270 business leaders in real estate highlighting economic uncertainty and taxation as the two biggest barriers to investment. The rise in unemployment to 5.2% in December, paired with 0.1% GDP growth for Q4 of 2025 further underpin these concerns.
“However, there is cause for buyers to feel more positive about the future market. The latest UK inflation figures revealed a fall to 3%, paving the way for further interest rate cuts this year. Two thirds (65%) of the Real Estate 360 respondents were optimistic about the future of the industry over the next 12 and 36 months, with expectations for residential house prices for 2026 slightly higher than most forecasts at 4%. Additionally, sustainable rental growth was 3.5% in the UK for the year to January 2026 and 8.0% in the highest region, the North East.
“However, there remains significant concern that the Government’s target to build 1.5m new homes by 2029 will not be met. Our survey found 39% of respondents believe viability around cost of development was the biggest barrier to meeting targets, with abolition or possible reform of SDLT being the most popular incentive the government could enact to improve viability.
“London continues to be the region with lowest annual house price growth at -1%. Pressure on prices and costs of development have meant that residential development in London has virtually stopped, and this will only be reversed if developments become viable again. The sector urgently needs the Government to review planning reforms and tax policy to enable this.”