UK house prices unexpectedly fell in December, according to a top mortgage lender, with the market finishing the year with the weakest annual growth in more than 18 months.
The average property price slumped by 0.4% to £271,068 when compared with November, according to Nationwide, confounding City forecasts of a 0.1% rise.
The UK’s biggest building society also said that the rate of annual house price growth slowed to 0.6% in December, the weakest year-on-year reading since April 2024.
Ian Futcher, a financial planner at the wealth management company Quilter, said that while December was usually a quieter month, “this year, that seasonal slowdown was amplified by the timing of the budget”.
He added: “With key fiscal decisions pushed later into the year, many prospective buyers and movers chose to put plans on ice until they had clarity on the policy landscape, before then allowing those plans to slip further as attention turned to the festive period.”
Nationwide noted that while house prices ended last year on a “softer note”, overall the market had shown resilience through a turbulent 2025.
Changes to stamp duty introduced in April created volatility in the market through the spring and summer, and the November timing of the budget created uncertainty in the final quarter of the year.
“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,” said Robert Gardner, the chief economist at Nationwide.
The building society said the first-time buyer share of house purchases is above the long-run average, with the share of loans against a deposit of 15% or less at its highest level for a decade.
Last month, Halifax said that buyers attempting to get on the property ladder were in the best position to snap up a home in a decade.
The UK’s biggest mortgage lender said when property prices were compared with average incomes, affordability was at its strongest since late 2015.
In December the Bank of England cut interest rates from 4% to 3.75%, with the market expecting further cuts this year to boost activity.
“The Bank of England’s decision to cut rates in December marks an important turning point after a prolonged period of tight monetary policy,” Futcher said. “With the budget now behind us and greater clarity on the direction of interest rates, we may finally see at least some of the housing plans that were shelved late last year being dusted off.”
