UK house prices fall AGAIN ahead of Bank of England base rate decision plus predictions for 2025 revealed 

HOUSE prices have fallen for the second month in a row ahead of a key Bank of England decision this week.

The average price tag on a home fell by £6,395 in December, according to the latest figures from Rightmove, published today.

Across the UK, the typical asking price for a property coming onto the market was £360,197, the property website said.

That is 1.7% lower than in November, when house prices dropped by more than £5,000, down 1.4% on October.

Rightmove publishes monthly house price data based on asking prices from the property listings on its website, though homes could still sell for more or less than the advertised price tags.

The property website said prices had fallen in line with the usual December lull, as potential movers wait for later in the month to put in offers.

However, it said that despite this, the number of sales being agreed in December was up year-on-year, rising by 22%.

Rightmove said all indications were that there would be a “busy Boxing Day bounce” in home-mover activity as buyers and sellers flood onto its website after Christmas.

Tim Bannister, director of Property Science at Rightmove, said: “New sellers in December have to work particularly hard to capture the attention of Xmas-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.

“Despite this monthly drop, prices have risen by 1.4% compared with this time in 2023, broadly in line with our prediction of a 1% rise in prices this year.

“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.”

The latest data from Rightmove comes ahead of a key Bank of England base rate decision this week, where policymakers decide whether to increase or lower the rate or keep it the same.

The central bank is next meeting on Thursday, December 19 and the committee is expected to keep the rate at 4.75%.

But the governor of the BoE, Andrew Bailey, has recently signalled there could be four rate cuts in 2025, which could stimulate the housing market.

What will happen to house prices in 2025?

Despite the December dip and with falls in house prices in November, Rightmove anticipates asking prices will increase by 4% in 2025.

The property website said this will follow anticipated mortgage rate falls which will encourage more people to move and buy homes.

This is its highest prediction for increases in prices since 2021 and comes as a result of improving buyer affordability and the release of some pent-up demand.

This is expected to put modest upwards pressure on prices next year.

Rightmove also expects a surge in the number of completed sales in March next year to beat the Stamp Duty deadline at the end of that month.

However this will be tempered by an expectation that sellers will still price properties to attract buyers who are “spoilt for choice”.

Buyers are also being stretched on affordability, especially with a slow-down expected in the rate of wage growth, following the National Insurance increases in the Budget, Rightmove said.

National Insurance contributions will rise for employers, not staff. But the extra cost to businesses is expected to have a knock on affect on pay rises and jobs.

The mood among the property sector is that 2025 will be a largely positive year for the market though.

Nathan Emerson, chief executive officer of Propertymark, said: “Into 2025, we hope to see progress on a number of key subjects such as Planning and Infrastructure Bill, which will pave the way for the UK Government to kick start their ambitious plans of delivering 1.5 million new homes by 2029 and help level out the current mismatch between housing supply and demand.”

What it means for you

Generally, higher mortgage rates deter buyers, which can have a knock-on effect on house prices as demand falls.

Lower mortgage rates help buyers as it means their monthly mortgage repayments are smaller.

Interest rates have risen from historic lows of 0.1% in December 2021, and peaked at 5.25% in July 2023, as part of efforts to reduce inflation to the BoE’s 2% target.

This led to a sharp increase in mortgage costs for millions of households, adding thousands of pounds to some bills, and

But now inflation has fallen back closer to 2% and interest rates are expected to follow.

The base rate cut in November by the BoE followed its first since 2020 from 5.25% to 5% back in August.

As mortgage rates come down buyer demand is expected to pick up, pushing up house prices – hence the positive outlook for 2025.

That’s good news for sellers looking to get the best price for their property, though they also face paying more for a new place they move to.

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