The UK housing market demonstrated notable resilience throughout 2025, despite a slight softening in prices as the year drew to a close, according to the latest data from Nationwide Building Society.
A Year of Market Resilience
Robert Gardner, Nationwide's Chief Economist, stated that the overarching theme for the property sector in 2025 was 'resilient'. This characterisation comes even though consumer confidence remained relatively muted, with many households cautious about spending and mortgage rates hovering at approximately three times their post-pandemic lows. Remarkably, mortgage approvals stayed close to their pre-Covid levels, indicating underlying strength in buyer demand.
Stamp Duty Changes and Market Volatility
The market experienced significant volatility in the spring and summer months following alterations to stamp duty land tax, which became effective at the start of April. A pronounced spike in transactions occurred during March as buyers rushed to complete purchases before the new rules took effect, aiming to avoid higher tax bills. This front-loaded activity inevitably led to a period of softer demand in the subsequent months. However, Gardner emphasised that the fundamental picture remained largely unchanged, with demand holding up well across the year.
Outlook for 2026 and Policy Impact
Looking forward, Nationwide's forecast for 2026 anticipates annual house price growth within a band of 2% to 4%. This projection is based on expectations that income growth will outpace increases in property values, coupled with a predicted modest decline in interest rates.
Commenting on recent government policy, Gardner noted that property tax changes announced in the last budget are 'unlikely' to significantly sway the market. The high-value council tax surcharge, which will affect fewer than 1% of English properties and roughly 3% in London, is not scheduled for introduction until April 2028. However, increased taxes on property income may further dampen buy-to-let investment, potentially restricting the supply of new rental homes and maintaining upward pressure on private rents.
Echoing the sentiment of cautious optimism, Amy Reynolds, Head of Sales at Richmond estate agency Antony Roberts, said the anticipation of continued lower mortgage rates should help rebuild buyer confidence. "There is more optimism and a feeling of relief now that the budget is over," she stated. "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."
