UK Housing Market Exhibits Resilience Despite Price Slowdown in Late 2025

UK property valuations have entered a period of stabilization as 2025 draws to a close, presenting a paradoxical picture of underlying strength amid surface-level price pressures. According to analysis from Nationwide’s chief economist Robert Gardner, the housing sector continues to demonstrate robust fundamentals even as monthly metrics flash warning signals.

The Contradiction Between Pricing and Demand

The headline figures paint a picture of deceleration: annual growth in UK housing prices dropped to 0.6% in December, marking the lowest point since April 2024. This represents a sharp deceleration from the 1.8% annual increase recorded just one month prior. When stripping away seasonal adjustments, the situation appears even more pronounced, with month-on-month valuations declining 0.4% through December.

However, these softening price indicators mask a more nuanced market reality. The mortgage loan approval pipeline remains surprisingly robust, hovering near pre-pandemic approval volumes despite consumer sentiment showing considerable restraint. Household spending intentions remain conservative, and borrowing costs persist at roughly three times their post-crisis lows.

Understanding the Base Effect

The apparent weakness in year-on-year price comparisons stems partly from the statistical calendar. December 2024 benefited from unusually strong conditions, with property prices climbing 4.7% annually at that time. This elevated comparison point naturally produces lower growth rates when measuring December 2025 against that inflated baseline.

Market Fundamentals Remain Intact

What distinguishes this cycle is the disconnect between caution in consumer psychology and strength in underlying housing demand. Despite subdued confidence levels and elevated mortgage servicing costs, the fundamental drivers supporting the UK housing market have not materially deteriorated. The characterization of the broader 2025 housing cycle as “resilient” appears justified by the evidence of sustained purchase activity and consistent mortgage origination volumes.

This suggests that price softening at year-end may represent a temporary adjustment rather than the beginning of a sustained contraction cycle.