The UK housing market ended 2025 on a notably softer note. Annual house price growth slowed sharply to just 0.6% in December, down from 1.8% in November, marking the slowest rise since April 2024, according to Nationwide Building Society's latest index.
Average UK house prices fell 0.4% month-on-month to £271,068. The deceleration caps a year that chief economist Robert Gardner described as "resilient" overall, despite subdued consumer sentiment and mortgage rates running around three times their post-pandemic lows.
Stamp duty changes that took effect in early April created significant market volatility. Gardner noted that activity spiked in March as purchasers rushed to complete transactions before the tax increase hit. "Activity spiked in March as purchasers brought forward transactions to avoid paying additional tax and this led to some softness in the following months," he explained in Nationwide's commentary.
The autumn Budget's timing amplified December's seasonal slowdown. Ian Futcher, a financial planner at wealth manager Quilter, said prospective buyers delayed decisions until policy clarity emerged. "With key fiscal decisions pushed later into the year, many prospective buyers and movers chose to put plans on ice until they had clarity on the policy landscape, before then allowing those plans to slip further as attention turned to the festive period," he noted.
Regional Variations
The fourth-quarter data revealed stark regional differences. Northern Ireland led the UK with a 9.7% annual price increase, though values remain around 5% below the 2007 all-time high at £216,919. UK prices overall have risen almost 50% over the same period.
The North West topped English regions with a 3.5% annual rise to £225,665. East Anglia was the only region recording a price fall, down 0.8% to £269,912. London saw modest 0.7% growth, with average prices at £529,372.
2026 Outlook
Nationwide forecasts house prices will rise 2% to 4% in 2026 as affordability improves. Gardner expects housing market activity to strengthen as income growth outpaces house price growth and interest rates decline further.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said lenders are positioning for growth. "Market expectations are for another two or three base rate reductions this year. This will provide a welcome shot in the arm for the housing market," he stated.
Nathan Emerson, chief executive of property professionals' body Propertymark, emphasized that "Stable house prices provide a solid foundation for the year ahead, allowing buyers and sellers to make more informed decisions without the pressure of rapid price movements."
Nicky Stevenson, managing director at estate agent Fine & Country, said "As we move into 2026, the market appears well placed for a steadier, more sustainable phase. With greater policy clarity following the autumn Budget and borrowing costs expected to ease further, there are solid foundations for activity to pick up again once the traditional spring selling season gets underway."
Note: This article was created with Artificial Intelligence (AI).
