The UK housing market closed 2025 with a noticeable loss of momentum, as annual house price growth slowed sharply to 0.6 percent in December from 1.8 percent a month earlier. This softer finish reflects both a high comparison base from late 2024 and a small monthly price fall, signalling that the post-pandemic surge has firmly faded.

Even so, 2025 was marked more by resilience. Mortgage approvals stayed close to pre-COVID levels despite cautious consumer sentiment and elevated borrowing costs. Temporary volatility followed April's stamp duty changes, but underlying demand remained steady as easing mortgage rates and slower price growth improved affordability, particularly for first-time buyers.

Regional differences were striking. Northern Ireland continued to outperform, recording annual growth of 9.7 percent, while East Anglia was the only region to see a decline. Northern England generally outpaced the South, where London and flat-heavy markets lagged. By property type, demand favoured space, with semi-detached and detached homes outperforming flats, which saw a modest annual fall.

Looking ahead to 2026, gradual affordability gains and lower interest rates are expected to support a modest recovery, with house price growth forecast between 2 percent and 4 percent.

The Nationwide House Price Index (HPI) provides house price information derived from Nationwide lending data for properties at the post survey approval stage. Nationwide house prices are mix adjusted; that is, they track a representative house price over time rather than the simple average price.

Home values affect much in the economy especially the housing and consumer sectors. Periods of rising home values encourage new construction while periods of soft home prices can damp housing starts. Changes in home values play key roles in consumer spending and in consumer financial health. During the first half of this decade sharply rising home prices boosted how much home equity households held. In turn, this increased consumers' ability to spend, based on wealth effects and from being able to draw upon expanding home equity lines of credit.

Although the Nationwide data are calculated similar to the Halifax method Nationwide substantially updated their system in 1993 following the publication of the 1991 census data. These improvements mean that Nationwide's system is more robust to lower sample sizes because it better identifies and tracks representative house prices. Historically, the data go back to 1952 on a quarterly basis and 1991 on a monthly basis.

Over long periods the Halifax and Nationwide series of house prices tend to follow similar patterns. This stems from both Nationwide and Halifax using similar statistical techniques to produce their prices. Nationwide's average price differs because the representative property tracked is different in make up to that of Halifax.