UK house prices fall in festive lull but property market activity stronger than 2023

Average new seller asking prices fell by 1.7% to £360,197 this month, in line with the usual December lull, the Rightmove house price index (HPI) has shown.

This drop was lower than the 1.9% fall in average house prices that the index revealed this time last year.

Despite the monthly drop, prices have increased by 1.4% compared with this time in 2023, which Rightmove says is "broadly in line" with their prediction of a 1% rise in prices this year.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Tim Bannister, director of property science at Rightmove, said: “New sellers in December have to work particularly hard to capture the attention of Christmas-party and festivity-distracted buyers, and the 1.7% average monthly fall is a fitting gift for those who are still buying homes rather than presents."

As well as the year-on-year price increase, housing market activity substantially increased compared to a year ago. The number of sales agreed increased 22% and new buyer demand increased by 13%.

“We are now looking ahead to the traditional Rightmove Boxing Day bounce in home-mover activity, which has increasingly become a key date in the housing market calendar,” said Bannister.

Boxing Day typically registers a significant bounce, and last year saw a record number of new sellers for the day. Buyer demand increased 273% between the Christmas Day lull and Boxing Day.

According to Bannister, Rightmove’s real-time data “can pinpoint the exact moment that the turkey is finished, family games run out of steam, mobile devices are picked up, and prospective movers flood onto Rightmove and get their 2025 move started”.

How will stamp duty changes impact house prices in 2025?

Rightmove’s house price index included real-time data that shows how homeowners are responding to the upcoming increase in stamp duty.

Temporary increases to stamp duty thresholds will end on March 31, 2025, meaning more buyers will be affected by the levy.

In the Autumn Budget, Labour also announced an overnight hike to the stamp duty rate on second home purchases - which increased by two percentage points.

Rightmove’s data shows that house prices are holding up best in the first-time-buyer sector, particularly among houses priced below £300,000.

However, according to Bannister, the impending change in stamp duty is weighing on the housing market overall.

“The stamp duty changes are a cloud over the market at the moment, with some groups much more impacted than others,” he says. “After the important first three months of the year in 2025, a lot depends on how quickly normal activity is resumed with higher stamp duty in England. A Bank Rate cut and some mortgage rate falls early on in the year would help to settle the market and provide a boost to sentiment and consumer confidence."

“The property market has shown remarkable resilience this year, with sales activity remaining strong, which gives us optimism for a promising 2025,” said Steven Holden, director at Holden Copley, a Nottingham-based estate agent.

“While the market remains robust, we’re mindful of challenges ahead, including the anticipated impact of stamp duty reverting to previous levels in April.”

Where is the best place to buy a house in the UK?

The regions that saw the largest decrease in house prices during December are London, where average house prices fell 3.2% from the previous month to £661,444; Yorkshire and Humber, where house prices fell 2.5% to £243,456; and the East Midlands, where average house prices fell 2.3% to £280,153.

In terms of the regions seeing the smallest seasonal lull, house prices in the South West fell just 0.4% in December, to £373,223, while house prices in Wales and the North West both fell 0.6%, to an average of £258,487 and £258,205 respectively.

The cheapest region in the UK to buy a house, according to Rightmove’s house price index, is the North East of England, where the average house price is £186,013.

However, house prices here have risen faster than any other region over the past year, at 4.2%. House prices in the North West of England rose 3.8% over the past year.

The only region in which Rightmove’s house price index shows a year-over-year fall in house prices is London, where the average house price this December is 0.6% below the same time last year.

There is a lot of regional diversification within the capital though. The most expensive London borough is Kensington and Chelsea, where the average house costs £1,650,916 – although this marks a 3.7% drop in house prices in the borough this time last year.

At the other end of the spectrum, the average house in Newham costs £475,550. While this makes it the cheapest London borough, prices here have increased 5.1% year-on-year.