UK House Prices Rise More Than Expected

The UK Nationwide House Price Index rose 1% year-on-year in January 2026, surpassing the expected 0.7% and picking up from a 0.6% gain in December. On a monthly basis, prices increased 0.3%, in line with expectations, following a 0.4% decline in December. Nationwide Chief Economist Robert Gardner said housing activity dipped at the end of 2025, likely due to uncertainty over potential property tax changes, but mortgage approvals remained near pre-pandemic levels. He added that affordability improved over the past year, supported by earnings growth outpacing house prices and a steady decline in mortgage rates, helping sustain buyer demand. First-time buyer activity continued to rise as a share of purchases, with many buyers benefiting from relatively low mortgage payments. Regional variations persisted: London saw the largest improvement but remained least affordable, Northern Ireland worsened, while Scotland and parts of the North remained manageable.

The UK Nationwide House Price Index rose 0.6% year-on-year in December 2025, below market forecasts of 1.2% and easing from November’s 1.8% gain, marking the softest annual growth since April 2024. Compared to November, prices unexpectedly fell 0.4%, after taking account of seasonal effects, defying expectations of a 0.1% increase and reversing a 0.3% rise in the prior month, marking the first monthly decline in four months. Nationwide Chief Economist Robert Gardner said the slowdown in the year-on-year growth rate partly reflected strong price gains in December 2024 as well as the December 2025 price fall, and that the number of mortgages approved remained similar to levels before the COVID-19 pandemic. ” With price growth well below the rate of earnings growth and a steady decline in mortgage rates, affordability constraints eased somewhat, helping to underpin buyer demand," he added. Looking ahead, house price growth is expected to grow at an annual rate of 2% to 4% in 2026.

The UK Nationwide House Price Index rose 1.8% year-on-year in November 2025, above the expected 1.4% but slowing from October’s 2.4% gain, marking the softest annual growth since June 2024. On a monthly basis, prices increased 0.3%, compared to expectations of no growth and up from 0.2% in the prior period. Nationwide Chief Economist Robert Gardner noted resilience despite subdued consumer confidence, early signs of labour market weakness, and mortgage rates more than double pre-Covid levels, with prices near all-time highs. He added that steady mortgage approvals and ongoing demand, particularly from first-time buyers, support market stability. Gardner expects modest affordability improvements if income growth outpaces house prices, aided by potential Bank Rate cuts and strong household balance sheets. Housing activity is likely to remain steady, with limited impact from upcoming property tax changes and continued upward pressure on rental growth due to constrained supply.