Housing market activity remained resilient throughout 2025 and is expected to strengthen slightly next year, with house price growth forecast to sit in the 2% to 4% range in 2026, according to Nationwide’s latest House Price Review and Outlook.
House price growth slowed steadily over the course of 2025, easing from late-2024 levels but remaining positive.
This moderation, combined with earnings growth outpacing house price inflation and a gradual decline in mortgage rates, helped ease affordability pressures.
While changes to Stamp Duty created short-term volatility earlier in the year, underlying demand proved stable and prices ended the year close to previous record highs.
As a result, buyer demand held up, with first-time buyers accounting for a higher-than-average share of transactions and high loan-to-value lending reaching its highest level in more than a decade.
Regional performance varied markedly.
Northern Ireland significantly outperformed the rest of the UK, recording double-digit annual growth during the first three quarters of the year, while Wales broadly tracked the national average and Scotland saw slightly stronger growth.
London was the weakest-performing region, continuing a longer-term trend of northern regions of England outperforming the south and narrowing the long-standing price gap between regions.
Looking ahead, house price growth is forecast to remain in the 2% to 4% range, supported by further gradual declines in interest rates and continued income growth.
Recent Budget measures are not expected to have a significant short-term impact on overall market activity, although higher taxes on property income could weigh on buy-to-let investment and rental supply over time.
Robert Gardner, chief economist at Nationwide, said: “The word that best describes the housing market in 2025 is ‘resilient’.
“Even though consumer sentiment was relatively subdued, with households reluctant to spend and mortgage rates around three times their post pandemic lows, mortgage approvals remained near pre-Covid levels.”
“House prices evolved broadly in line with our expectations. As a result, prices were close to the all-time high recorded in the summer of 2022 as the year drew to a close.”
“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.
“The first-time buyer share of house purchase activity was above the long run average, supported by easier credit availability, with the share of high loan to value lending (i.e. with a deposit of 15% or less) reaching its highest level for over a decade.”
He continued: “Looking ahead, we expect housing market activity to strengthen a little further as affordability improves gradually (as it has been in recent quarters) via income growth outpacing house price growth and a further modest decline in interest rates.
“We expect annual house price growth to remain broadly in the 2 to 4% range next year.”
