The UK housing market demonstrated notable resilience throughout 2025, according to the latest data from Nationwide Building Society. Despite a slight dip in December and facing headwinds from subdued consumer sentiment and elevated mortgage rates, the market held up well over the year.
A Year Defined by Market Resilience
Robert Gardner, Nationwide's Chief Economist, stated that the defining characteristic of the 2025 property market was 'resilient'. He highlighted that mortgage approvals stayed close to their pre-pandemic levels, a significant achievement given that mortgage rates remained approximately three times higher than their post-pandemic lows and households were cautious with spending.
The year saw significant volatility in the spring and summer months, driven primarily by changes to stamp duty. Activity surged in March as buyers rushed to complete purchases before the new tax rules took effect at the start of April. This front-loading of transactions inevitably led to a period of softer activity in the subsequent months. However, Gardner emphasised that the fundamental demand in the market remained robust throughout this period.
Outlook for 2026 and Policy Impacts
Looking forward, Nationwide has issued its forecast for the coming year. The lender anticipates annual house price growth to be between 2% and 4% in 2026. This projection is based on expectations that growth in incomes will outpace house price increases, coupled with a predicted modest fall in interest rates.
Gardner also commented on recent property tax changes announced in the government's final budget. He suggested they are 'unlikely' to significantly sway the market. The high-value council tax surcharge, for instance, is not scheduled for introduction until April 2028 and will affect fewer than 1% of English properties, and roughly 3% in London.
However, he noted that increased taxes on property income could further dampen activity in the buy-to-let sector. This may constrain the supply of new rental properties coming to market, potentially maintaining upward pressure on private rental costs.
Industry Perspective on Buyer Confidence
Estate agents on the ground are observing a shift in mood. Amy Reynolds, Head of Sales at Antony Roberts estate agency in Richmond, noted that the anticipation of continued lower mortgage rates should help rebuild buyer confidence in 2026.
'There is more optimism and a feeling of relief now that the budget is over,' Reynolds said. 'We do not expect huge price rises and a racing market, more a return to the normal pre-budget market which has been on hiatus while everyone waited to see what the government would roll out.'
In summary, while the UK property market faced challenges in 2025, its underlying strength prevented a downturn. With a stable forecast for modest growth and a potential boost in buyer confidence, the market appears set for a period of cautious normalisation in the year ahead.
