The UK housing market demonstrated notable resilience throughout 2025, despite a slight dip in prices as the year concluded, according to the latest analysis from Nationwide Building Society.
A Year of Market Resilience
Chief Economist Robert Gardner stated that the overarching theme for the property sector in 2025 was 'resilient'. This strength persisted even against a backdrop of cautious consumer spending and mortgage rates that hovered at approximately three times their post-pandemic lows. Remarkably, the volume of mortgage approvals managed to stay close to the levels seen before the Covid-19 pandemic.
Stamp Duty Changes and Market Volatility
The market experienced significant fluctuations during the spring and summer months. This volatility was primarily triggered by alterations to stamp duty land tax, which came into force at the start of April. A sharp spike in transactions occurred in March as buyers rushed to complete purchases ahead of the new tax rules, aiming to avoid higher charges. This forward-loading of activity inevitably led to a period of softer demand in the subsequent months. However, Nationwide emphasised that the fundamental demand for housing remained robust throughout the entire period.
Outlook for 2026 and Policy Impact
Looking forward, Nationwide has issued its forecast for the coming year, anticipating annual house price growth to settle between 2% and 4% in 2026. This projection is based on expectations that growth in household incomes will outpace rising property values, coupled with a predicted modest reduction in interest rates.
Gardner also commented on recent government fiscal measures, noting that the 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 implementation until April 2028. However, he warned that increased taxes on rental income could further dampen buy-to-let investment. This may constrain the supply of new rental properties entering the market, potentially sustaining upward pressure on private rents.
Echoing this measured optimism, Amy Reynolds, Head of Sales at Richmond estate agency Antony Roberts, observed a renewed sense of confidence among buyers. "The anticipation of continued lower mortgage rates should help restore buyer confidence this year," she said. "There is more optimism and a feeling of relief now that the budget is over. 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."
