UK house prices ended 2025 on a softer footing after an unexpected dip in December, as buyers paused activity at the close of the year following months of policy uncertainty and high moving costs.
Data from Nationwide Building Society shows that annual house price growth slowed sharply to 0.6 per cent in December, down from 1.8 per cent in November. On a monthly basis, prices fell by 0.4 per cent, taking the average UK home value to £271,068.
It marked the weakest rate of annual growth since April 2024 and surprised analysts who had expected the market to finish the year more firmly.
Despite the slowdown, Nationwide’s chief economist Robert Gardner said the housing market had proved resilient over the course of 2025. He pointed out that mortgage approvals remained close to pre-pandemic levels, even as consumer confidence stayed subdued and borrowing costs remained significantly higher than their post-Covid lows.
Gardner said changes to stamp duty introduced in April created notable volatility earlier in the year, prompting a surge in transactions in March as buyers rushed to complete before higher taxes took effect. That activity was followed by a period of softness, though demand broadly held up through the remainder of the year.
Regional figures for the final quarter showed a mixed picture. East Anglia was the only part of the UK to record an annual fall in prices, with values down 0.8 per cent. Northern Ireland continued to outperform all other regions, posting annual growth of 9.7 per cent.
Within England, the North West was the strongest-performing region, with prices rising 3.5 per cent over the year across areas including Cheshire, Lancashire and Greater Manchester.
Looking ahead, Nationwide expects house prices to rise by between 2 and 4 per cent in 2026, supported by improving affordability and easing borrowing costs.
Wealth manager Quilter said uncertainty around fiscal policy had played a key role in dampening late-year activity. Ian Futcher, investment manager at the firm, said many buyers delayed decisions until greater clarity emerged, before allowing plans to drift further as attention shifted to Christmas.
Specialist lender MT Finance said high transaction costs were continuing to weigh on mobility. Director Tomer Aboody said stamp duty in particular remained a barrier, leading many homeowners to stay put and invest in improving existing properties rather than moving.
Estate agents struck a more optimistic tone for the year ahead. Nicky Stevenson, managing director at Fine & Country, said the market was entering 2026 with firmer foundations, helped by greater policy certainty following the autumn budget and expectations that borrowing costs would continue to fall.
She added that activity was likely to pick up as the traditional spring selling season approaches, signalling a return to steadier, more sustainable growth.
