The UK housing market ended 2025 on a subdued note, with average property values falling by 0.4% between November and December, according to the latest data from Nationwide Building Society.
Annual Growth Slows to a Trickle
This monthly drop contributed to a significant slowdown in the annual rate of house price growth. The year ended with prices just 0.6% higher than in December 2024, a sharp deceleration from the 1.8% annual growth recorded in November. This 0.6% figure represents the weakest yearly performance since April 2024.
The typical UK home now costs £271,068, Nationwide reported. Despite the soft finish, the building society's chief economist, Robert Gardner, described the market's overall performance in 2025 as "resilient." He noted that mortgage approvals stayed near pre-pandemic levels, even with subdued consumer spending and mortgage rates remaining well above their post-Covid lows.
Regional Spotlight: West Midlands Holds Firm
Regional data for the final quarter of 2025 reveals a mixed picture across the country. The West Midlands proved to be one of the stronger performers in England, with average house prices rising by 2.3% over the year to reach £250,865.
However, the standout region was Northern Ireland, where prices surged by 9.7% annually, although they remain about 5% below their 2007 peak. The North West of England, covering areas like Greater Manchester and Lancashire, was the strongest English region with a 3.5% yearly increase.
At the opposite end of the scale, East Anglia was the only area to see an annual price decline, with values down 0.8%. London's market remained largely flat, with a modest 0.7% annual increase leaving the average price at £529,372.
Experts Forecast a Gradual Recovery in 2026
Looking ahead, economists point to several factors that could support the market. Robert Gardner expects activity to strengthen as affordability slowly improves, helped by wages rising faster than house prices and a predicted modest decline in interest rates. Nationwide anticipates UK property values will rise by approximately 2% to 4% over the next twelve months.
Industry experts echoed this cautiously optimistic tone. Mark Harris, chief executive of mortgage broker SPF Private Clients, said, "Hard-pressed borrowers will be hoping for January sales from lenders with lower mortgage rates. The trend in new mortgage pricing was downwards in December." He expects further Bank of England base rate cuts to provide a "welcome shot in the arm" for the housing market.
Nathan Emerson of Propertymark highlighted the upside of stability, stating that steady prices provide a "solid foundation" for buyers and sellers to make informed decisions. Iain McKenzie from The Guild of Property Professionals expects improved affordability and greater certainty to encourage more moves in the new year.
However, some barriers remain. Tomer Aboody, director of MT Finance, identified the cost of moving, and stamp duty in particular, as a major deterrent, leading many to improve their current home instead of relocating.
Full regional house price data for Q4 2025 (average price, annual change):
- Northern Ireland: £216,919, 9.7%
- North West: £225,665, 3.5%
- Wales: £213,894, 3.2%
- West Midlands: £250,865, 2.3%
- Yorkshire and the Humber: £212,110, 2.3%
- North East: £168,317, 2.2%
- Scotland: £190,649, 1.9%
- East Midlands: £238,183, 1.0%
- London: £529,372, 0.7%
- South West: £308,228, 0.5%
- Outer South East: 0.1%
- East Anglia: £269,912, -0.8%
