In a year marked by economic volatility, the UK housing market has shown remarkable resilience, according to a leading mortgage lender. While house prices ended 2025 on a “softer note,” with the average property price slipping by 0.4% in December to £271,068, the overall market demonstrated a capacity to weather the turbulent conditions.
Nationwide, the UK’s biggest building society, reported that the annual house price growth slowed to 0.6% in December, the weakest year-on-year reading since April 2024. This unexpected decline confounded City forecasts of a 0.1% month-on-month rise.
Ian Futcher, a financial planner at the wealth management company Quilter, attributed the seasonal slowdown to the timing of the government’s budget. “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 explained.
Despite the softening in the final months of the year, Nationwide noted that the overall housing market had demonstrated resilience through the turbulent conditions of 2025. Changes to stamp duty introduced in April created volatility in the market through the spring and summer, while the November timing of the budget contributed to uncertainty in the final quarter.
“Even though consumer sentiment was relatively subdued, with households reluctant to spend and mortgage rates around three times their post-pandemic low, mortgage approvals remained near pre-Covid levels,” said Robert Gardner, the chief economist at Nationwide.
The building society also reported that the first-time buyer share of house purchases is above the long-run average, with the share of loans against a deposit of 15% or less at its highest level for a decade. Last month, Halifax, the UK’s biggest mortgage lender, stated that buyers attempting to get on the property ladder were in the best position to snap up a home in a decade, as affordability reached its strongest level since late 2015.
The Bank of England’s decision to cut interest rates from 4% to 3.75% in December was seen as an important turning point after a prolonged period of tight monetary policy. With greater clarity on the direction of interest rates, Futcher expressed optimism that some of the housing plans that were shelved late last year may now be dusted off.
Overall, the UK housing market has demonstrated its resilience in the face of a turbulent 2025, with the modest decline in house prices at the end of the year serving as a testament to the market’s capacity to adapt to changing economic conditions.