UK house prices rose by 2.4 per cent in December compared with a year earlier, marking a continued recovery in the property market as buyer demand gradually strengthened toward the end of the year.

The latest data indicate that average prices edged higher on both an annual and monthly basis, supported by improving consumer confidence and expectations that interest rates may have peaked.

The increase follows a period of subdued activity earlier in the year when higher mortgage costs and economic uncertainty weighed on transactions.

Estate agents reported firmer levels of agreed sales in the final quarter, with first-time buyers and movers returning cautiously to the market.

Analysts said that greater clarity around the path of inflation and borrowing costs had helped stabilise sentiment, even though mortgage rates remain significantly above the ultra-low levels seen during the pandemic.

The modest but steady price growth reflects constrained housing supply as well as persistent demand in many regions.

While affordability pressures continue to limit rapid expansion, particularly for younger buyers, the December figures suggest the market has avoided a sharper downturn.

Property economists noted that regional variations remain pronounced, with some areas in the North and Midlands experiencing stronger momentum than parts of southern England.

Nonetheless, the overall national picture points to a stabilising environment rather than renewed contraction.

Looking ahead, market participants say that the trajectory of interest rates and wage growth will play a decisive role in shaping housing activity in 2026. If borrowing costs ease gradually, analysts expect transaction volumes and prices to strengthen further, albeit at a measured pace consistent with broader economic conditions.