UK House Price Growth Weakest Since April 2024 After December Drop

London, UK: UK house price growth slowed sharply at the end of 2025, marking its weakest annual performance since April 2024, after prices unexpectedly fell in December, according to new data released by Nationwide Building Society.

Monthly figures showed that British house prices declined by 0.4% in December, leaving prices just 0.6% higher than a year earlier. The outcome contrasted with market expectations, as economists polled by Reuters had forecast a 0.1% monthly increase, which would have resulted in annual growth of 1.2%, down from 1.8% in November.

Year-on-year growth slows amid base effects

Nationwide said the slowdown in annual growth partly reflected strong price gains recorded in December 2024, combined with the price fall at the end of 2025. Despite softer pricing momentum, mortgage market activity remained broadly stable.

Nationwide Chief Economist Robert Gardner noted that mortgage approvals were still running at levels similar to those seen before the COVID-19 pandemic. “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,” he said.

Nationwide expects annual house price growth to range between 2% and 4% in 2026.

Policy outlook supports cautious optimism

Economists also pointed to policy and interest rate developments as supportive factors for a potential recovery in the coming months. Elliott Jordan-Doak, an economist at Pantheon Macroeconomics, said he expected prices to pick up as concerns around property taxation eased.

“Moreover, the improvement in affordability from the Bank of England's cut to interest rates in December will also be more fully reflected in January's data,” he said.

The Bank of England cut its main interest rate to 3.75% from 4% on December 18, and financial markets are pricing in one or two additional quarter-point cuts during 2026, which could further support housing demand.

Read more: UK House Prices Stagnate in June, Halifax Data Shows

Regional price divergence persists

The data highlighted continued regional variation across the UK housing market. The average property price in the fourth quarter of 2025 stood at USD 367,561 (£273,077). Prices ranged from USD 226,473 (£168,317) across much of northern England to USD 712,201 (£529,372) in London, where values rose 0.7% over the past year.

Northern Ireland recorded the strongest annual price growth in 2025, with values rising 9.7%, reflecting spillover demand from neighbouring Ireland. In contrast, eastern England delivered the weakest performance, with prices falling 0.8% over the year.

Outlook for 2026

While the December decline brought a subdued close to 2025, analysts broadly expect improving affordability, easing interest rates, and limited tax changes to provide a more supportive backdrop for the UK housing market in 2026. However, the pace of recovery is likely to remain uneven across regions as economic conditions continue to normalise.