UK house prices in surprise drop at end of 2025
Nationwide Building Society says the average price of a home in December has gone down 0.4% to £271,068
[LONDON] UK house prices unexpectedly fell in December, said a top mortgage lender, in a sign that the property market may have been affected by Labour’s tax-hiking Budget.
Nationwide Building Society said the average price of a home was down 0.4 per cent at £271,068 (S$469,000), declining for the first time in four months.
It reversed November’s 0.3 per cent increase and defied analysts’ expectations of a 0.1 per cent gain to end the year.
Across last year as a whole, house prices climbed 0.6 per cent, the slowest annual rate since April 2024, added Nationwide.
Chancellor of the Exchequer Rachel Reeves’ Budget on Nov 26 lifted taxes by £26 billion and announced a new levy on homes worth more than £2 million.
These make up a small fraction of the UK’s total housing stock, yet confidence remains subdued across the market.
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The Bank of England’s (BOE’s) decision to cut interest rates in December to 3.75 per cent, the lowest since 2023, will provide some support to homebuyers. However, affordability is likely to remain stretched as the BOE said that it is nearing the end of the easing cycle.
“Despite the softer end to the year, the word that best describes the housing market in 2025 overall is ‘resilient’,” said Robert Gardner, Nationwide’s chief economist.
“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,” he added.
Property values improved across most regions in 2025, with the North West, Wales and the West Midlands recording the largest rises. East Anglia was the only region where house prices declined year on year.
Flats continued to lag, reflecting a post-Covid desire for more space, higher administrative costs and London’s long-term underperformance compared with the rest of the UK.
Year on year, the price of flats declined 0.9 per cent.
This is the equivalent of an 18 per cent increase over the last decade, and is less than half of the 41 per cent increase recorded by terraced houses during the same period. BLOOMBERG
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