The UK housing market in 2025 demonstrated a remarkable degree of resilience, even as house price growth slowed sharply towards the end of the year. According to data from Nationwide, annual house price growth fell to just 0.6% in December, down from 1.8% in November and marking the slowest rate since April 2024. This moderation was partly due to a high base for comparison, as December 2024 had seen a robust annual price growth of 4.7%. On a monthly basis, prices adjusted for seasonal effects slipped by 0.4%, underscoring the softer conditions that prevailed as the year came to a close.

Despite these signs of cooling, the overall market weathered a range of challenges. Robert Gardner, Nationwide's Chief Economist, described 2025 as a year where “resilient” best captured the housing market’s character. Consumer confidence remained muted throughout the year, with households hesitant to spend and mortgage rates hovering at roughly three times their post-pandemic lows. Nevertheless, mortgage approvals held steady near pre-Covid levels, a testament to underlying demand and the ability of buyers to adapt to evolving financial conditions.

One of the year’s defining features was the volatility introduced by stamp duty changes that took effect in April. The anticipation of higher taxes spurred a surge in activity in March, as buyers rushed to complete transactions ahead of the deadline. This led to a dip in activity in the following months, but the overall demand for housing remained robust, with the underlying market picture largely unchanged. As mortgage rates gradually declined and price growth lagged behind earnings growth, affordability improved, providing a boost to buyer interest. The share of first-time buyers in house purchase activity rose above its long-term average, helped by easier access to credit and a notable increase in high loan-to-value lending, reaching its highest level in over a decade.

Regionally, the UK housing market exhibited pronounced disparities. Northern Ireland stood out as the best performing area for the third consecutive year, with prices rising by an impressive 9.7% in 2025. This rate was more than five times higher than the 1.7% seen across the UK as a whole in the fourth quarter, and nearly three times greater than the 3.5% recorded in the North West, England’s strongest region. The robust gains in Northern Ireland mirrored similar trends in the bordering regions of Ireland. Despite these increases, house prices in Northern Ireland remain around 5% below their all-time peak from 2007, while UK-wide prices are almost 50% higher than they were at that time. As a result, the typical home in Northern Ireland is now valued at approximately 79% of the UK average, a stark reversal from 2007 when it was about 25% higher.

Elsewhere, Scotland largely tracked the national average, posting annual house price growth of 1.9%. Wales saw a slight uptick to 3.2% and, alongside Northern Ireland, was one of the few regions to record stronger growth in 2025 than in the previous year. England, however, experienced a further slowdown, with annual growth easing to 1.2% from 1.6% in the third quarter. Within England, Northern regions such as North West, Yorkshire & The Humber, and the Midlands saw average prices rise by 2.3% year on year, with the North West leading at 3.5%. Southern England, including London and East Anglia, registered average growth of just 0.6%, with London itself seeing a subdued increase of 0.7% compared to a 2.0% rise in 2024.

East Anglia emerged as the weakest region, recording the only annual decline in house prices with a 0.8% fall. This mirrored a similar decrease in the second quarter of 2024, which also affected East Anglia. The divergence in regional performance highlights the complex dynamics at play, influenced by local economic conditions, demographic trends, and changing preferences among buyers.

Another notable trend was the variation in price growth by property type. Semi-detached homes saw the strongest gains, with prices rising by 2.4% over the year. Detached houses followed closely at 2.2%, while terraced properties posted a slightly more modest increase of 1.8%. In contrast, flats continued to lag, experiencing a small decline of 0.9% year on year. Over the past decade, flats have underperformed other property types, with prices rising by just 18% compared to a 41% increase for terraced houses. This difference is partly attributable to regional patterns, particularly the underperformance of London, where flats are more prevalent and where price growth has been subdued relative to the rest of the UK.

The pandemic played a role in reshaping buyer preferences, with a clear shift toward properties offering more space, a trend that has only partially reversed. Additionally, higher costs associated with maintaining flats, including ground rents and service charges, have likely dampened demand further. These factors combined have contributed to the ongoing softness in the flat market, especially in urban centers like London.

Looking ahead, Nationwide anticipates a gradual strengthening of housing market activity as affordability continues to improve. With income growth outpacing house price growth and interest rates expected to edge lower, annual house price gains are forecast to be in the 2% to 4% range for the coming year. Recently announced changes to property taxes are not expected to have a major impact, as the high-value council tax surcharge will not be implemented until April 2028 and will affect a small fraction of properties. However, increased taxes on property income could discourage buy-to-let investment, potentially limiting the supply of new rental properties and sustaining upward pressure on rents.

The UK housing market in 2025 was characterized by resilience amid economic headwinds and policy changes. Although growth slowed, underlying demand remained solid, regional disparities persisted, and shifts in buyer preferences continued to shape the market. As the sector moves into 2026, the interplay between affordability, regional performance, and evolving consumer priorities will likely remain key drivers of market dynamics.