The housing market of 2025 was resilient, with demand that held up well, according to Nationwide’s House Price Index for December.
Despite the year ending “on a softer note” in relation to house prices, Nationwide’s chief economist Robert Gardner said the word of the year was ‘resilient’.
“Even though consumer sentiment was relatively subdued, with households reluctant to spend and mortgage rates around three times their post pandemic lows, mortgage approvals remained near pre-Covid levels,” he explained.
“Stamp duty changes that took effect at the beginning of April created volatility through the spring and summer. Activity spiked in March as purchasers brought forward transactions to avoid paying additional tax and this led to some softness in the following months. However, the underlying picture was little changed as demand held up well throughout.”
Although the year end saw slower UK house price growth, down to 0.6% in December from 1.8% in November, the “softening” has resulted in improved affordability, Gardner said.
“With price growth well below the rate of earnings growth and a steady decline in mortgage rates, affordability constraints eased somewhat, helping to underpin buyer demand. Indeed, the first-time buyer share of house purchase activity was above the long run average, supported by easier credit availability, with the share of high loan to value lending (i.e. with a deposit of 15% or less) reaching its highest level for over a decade.”
Nathan Emerson, CEO of Propertymark, said home buyers will be reassured by the end-of-year figures, “with falling inflation and base rates improving affordability and helping more buyers consider their next move during 2026.”
He added:
“Given the number of policy and economic changes the housing market experienced throughout 2025, including legislative updates, mortgage rate fluctuations, and the autumn budget, a period of price stability is an encouraging outcome.
“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. As the market continues to adjust, this stability should support activity and confidence throughout 2026.”
Iain Mckenzie, CEO of The Guild of Property Professionals, said Nationwide’s figures should be seen as “a gentle cooling” rather than an underlying loss of resilience.
“What’s particularly encouraging is that activity has held up well,” he added.
“With around 1.2 million homes sold in 2025, the highest level since 2022, it’s clear that steady mortgage rates and rising wages have continued to support demand, even as buyers became more price-conscious towards the end of the year.”
Nationwide’s Gardner said he expects affordability to continue to improve, further strengthening the market, with annual house price growth within the 2% to 4% range.
Mckenzie agreed with the outlook, adding the Bank of England’s decision to cut Bank Rate in December offers “a timely boost for confidence.”
“While inflation remains above target, the latest figure coming in lower than expected will help reinforce sentiment,” he said.
“Lower borrowing costs, combined with a budget that proved less severe than many feared, should underpin activity as we head into the spring 2026 selling season.
“Overall, while headline price growth has slowed, the fundamentals remain positive. We expect market momentum to strengthen in the New Year as improved affordability and greater certainty encourage more buyers and sellers to make their move.”
