Changes to property taxes announced in the Budget are ‘unlikely’ to have a significant impact on the market, Nationwide said
The UK housing market ended 2025 on a “softer note,” with annual price growth slowing to 0.6% in December, from 1.8% in November, Nationwide Building Society said.
The latest rise was the the slowest since April 2024, according to its index.
Prices fell by 0.4% month-on-month, taking the average UK house price to £271,068 in December.
Robert Gardner, Nationwide’s chief economist, said: “Despite the softer end to the year, the word that best describes the housing market in 2025 overall 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.
“Stamp duty changes that took effect at the beginning of April created volatility through the spring and summer.
“Activity spiked in March as purchasers brought forward transactions to avoid paying additional tax and this led to some softness in the following months. However, the underlying picture was little changed as demand held up well throughout.”
The only region to see an annual decline was East Anglia, where prices fell by 0.8% (the first annual drop in a region since Q2 2024).
Northern Ireland continued to outpace the rest of the UK by a wide margin, with prices increasing by 9.7% over the year. This is more than five times faster than the 1.7% recorded in the UK as a whole in Q4.
Despite these significant price gains, house prices in Northern Ireland are still around 5% below the all-time high recorded in 2007, while UK prices are almost 50% higher over the same period.
Scotland broadly matched the wider UK trend in 2025 with annual house price growth of 1.9%. Meanwhile, Wales saw a slight increase in annual house price growth to 3.2% and was the only other part of the UK, apart from Northern Ireland, to see stronger house price growth in 2025 than in 2024.
The North West was the next-strongest area of the UK with 3.5% house price growth recorded over the year.
Looking ahead, Nationwide said it expected housing market activity to strengthen a little further as affordability improves gradually via income growth outpacing house price growth and a further modest decline in interest rates.
The lender said it expected annual house price growth to be broadly in the 2% to 4% range in 2026.
“The changes to property taxes announced in the Budget are unlikely to have a significant impact on the market,” added Mr Gardner.
“The high value council tax surcharge is not being introduced until April 2028 and will apply to less than 1% of properties in England and around 3% in London.
“The increase in taxes on income from properties may dampen buy-to-let activity further and hold down the supply of new rental properties coming onto the market, which could, in turn, maintain some upward pressure on private rental growth.”
