The Nationwide House Price Index showed that average house prices were £271,068 during the month, below the previous month’s average of £272,998.
On a monthly basis, house prices in the UK were 0.4% lower in December, compared to the 0.3% rise recorded in November.
Robert Gardner, chief economist at Nationwide, said: “UK house prices ended 2025 on a softer note, with annual price growth slowing to 0.6%, from 1.8% in November, the slowest pace since April 2024.
“The high base for comparison can partly explain the slowdown (annual price growth was a solid 4.7% in December 2024), although prices fell by 0.4% month-on-month, after taking account of seasonal effects.”
Gardner said, despite the “softer end to the year”, the housing market was resilient in 2025.
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“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.
Northern Ireland housing market remains the strongest
According to quarterly data, house price growth was the strongest in Northern Ireland, with a 9.7% quarter-on-quarter increase and a 9.6% annual rise to £216,919.
In Wales, average house prices were £213,894, representing a 3.2% quarterly increase and a 3% yearly rise.
Within England, the North West had the healthiest growth rate at 3.5% quarter-on-quarter and 3.2% annually to an average of £225,665.
The weakest growth was recorded in East Anglia, where average house prices fell by 0.8% quarter-on-quarter to £269,912. Compared to the previous year, values were 1.1% higher. It was the only region to record a fall since 2024.
Market activity to improve further
Gardner predicted that the 2026 housing market would be stronger.
He said: “Looking ahead, we expect housing market activity to strengthen a little further as affordability improves gradually (as it has been in recent quarters) via income growth outpacing house price growth and a further modest decline in interest rates. We expect annual house price growth to be broadly in the 2-4% range next year.
“The changes to property taxes announced in the Budget are unlikely to have a significant impact on the market. The high-value council tax surcharge is not being introduced until April 2028 and will apply to less than 1% of properties in England and around 3% in London. The increase in taxes on income from properties may dampen buy-to-let activity further and hold down the supply of new rental properties coming onto the market, which could, in turn, maintain some upward pressure on private rental growth.”
