UK House Prices Fall Unexpectedly at End of 2025 as Market Growth Slows Sharply
Nationwide data shows a surprise month-on-month decline in December and the weakest annual price growth since spring 2024, despite ongoing affordability improvements
UK house prices fell unexpectedly at the end of 2025, underlining a slowdown in the property market that defied City expectations of modest gains.
According to Nationwide Building Society’s latest House Price Index, the average UK home price slipped by 0.4 per cent in December compared with November, leaving the annual rate of price growth at just 0.6 per cent — the weakest year-on-year increase since April 2024 and well below forecasts of a slight rise.
The surprise monthly decline, to an average price of around £271,000, contrasted with predictions of a 0.1 per cent gain, reflecting subdued activity in the final weeks of the year.
Market participants and analysts attributed part of the softness to the unusual seasonal lull being amplified by policy uncertainty late in the year, including the timing of the UK budget, which temporarily paused some buyer decisions and delayed transactions.
Despite the softer end to the year, underlying conditions showed signs of resilience: affordability has improved because earnings growth outpaced house prices and mortgage borrowing costs eased following multiple interest-rate cuts by the Bank of England, including a reduction from four to 3.75 per cent in December.
Mortgage approvals remained close to pre-pandemic levels and the share of first-time buyers and high loan-to-value lending increased, suggesting continued demand among certain segments of the market.
Regional data also pointed to divergent trends in 2025, with Northern Ireland posting robust price gains while London and some southern regions recorded relatively modest increases or slight declines over the course of the year.
Looking ahead, Nationwide economists and private sector forecasters project more positive momentum for the housing market in 2026, supported by improved affordability, clearer fiscal policy and further gradual declines in borrowing costs.
Nevertheless, the unexpected price drop at the close of 2025 highlights ongoing challenges for the UK property sector as it adjusts to shifting economic conditions and buyer behaviour.
According to Nationwide Building Society’s latest House Price Index, the average UK home price slipped by 0.4 per cent in December compared with November, leaving the annual rate of price growth at just 0.6 per cent — the weakest year-on-year increase since April 2024 and well below forecasts of a slight rise.
The surprise monthly decline, to an average price of around £271,000, contrasted with predictions of a 0.1 per cent gain, reflecting subdued activity in the final weeks of the year.
Market participants and analysts attributed part of the softness to the unusual seasonal lull being amplified by policy uncertainty late in the year, including the timing of the UK budget, which temporarily paused some buyer decisions and delayed transactions.
Despite the softer end to the year, underlying conditions showed signs of resilience: affordability has improved because earnings growth outpaced house prices and mortgage borrowing costs eased following multiple interest-rate cuts by the Bank of England, including a reduction from four to 3.75 per cent in December.
Mortgage approvals remained close to pre-pandemic levels and the share of first-time buyers and high loan-to-value lending increased, suggesting continued demand among certain segments of the market.
Regional data also pointed to divergent trends in 2025, with Northern Ireland posting robust price gains while London and some southern regions recorded relatively modest increases or slight declines over the course of the year.
Looking ahead, Nationwide economists and private sector forecasters project more positive momentum for the housing market in 2026, supported by improved affordability, clearer fiscal policy and further gradual declines in borrowing costs.
Nevertheless, the unexpected price drop at the close of 2025 highlights ongoing challenges for the UK property sector as it adjusts to shifting economic conditions and buyer behaviour.
