British house prices slipped unexpectedly in December, falling 0.4% and leaving values just 0.6% higher over the course of 2025 — the weakest annual increase since April 2024, according to figures released on Friday by mortgage lender Nationwide Building Society.
Economists surveyed by Reuters had anticipated a 0.1% monthly rise, which would have pushed annual growth to 1.2% in December, easing from November’s 1.8% year-on-year increase.
Nationwide’s chief economist, Robert Gardner, said the softer annual growth partly reflected strong price gains recorded in December 2024, alongside the price decline seen in December 2025. He noted that mortgage approval numbers remained broadly in line with levels seen before the COVID-19 pandemic.
“With house price growth running well below earnings growth and mortgage rates continuing to edge lower, affordability pressures have eased slightly, which has helped support buyer demand,” Gardner said. Nationwide expects annual house price growth to be between 2% and 4% in 2026.
Elliott Jordan-Doak, an economist at Pantheon Macroeconomics, also expects prices to gain momentum, pointing to the limited scope of property tax increases announced in Chancellor Rachel Reeves’ November 26 budget. The measures were focused on higher-value homes, rather than being applied more broadly as some buyers had feared earlier.
He added that the Bank of England’s December interest rate cut should further improve affordability, with its full impact likely to be reflected in January’s housing data.
The BoE lowered its main interest rate to 3.75% from 4% on December 18, and financial markets are pricing in one or two additional quarter-point cuts during 2026.
Average house prices in the final quarter of last year stood at £273,077 ($367,561), though values varied sharply by region — from £168,317 across much of northern England to £529,372 in London, where prices rose 0.7% over the year.
Northern Ireland recorded the strongest growth in 2025, with prices up 9.7%, driven in part by gains in areas close to the Irish border. In contrast, eastern England saw the weakest performance, with house prices falling 0.8% over the year.
