Nationwide has said it expects house price growth to be in the 2% to 4% range in 2026 and that the slight easing in affordability pressures helped underpin buyer demand in what was a “resilient” 2025. The lender believes the property taxes announced in the Budget will have a negligible impact on the market next year.
One property expert described the lender’s predictions as sensible but another said they may be underestimating growth if the Bank of England cuts aggressively to stimulate the economy.
Robert Gardner, Nationwide’s Chief Economist, said: “The word that best describes the housing market in 2025 is ‘resilient’. 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.
“House prices evolved broadly in line with our expectations. Annual price growth slowed steadily from 4.7% at the end of 2024 to 2.1% in the middle of 2025 and then to 1.8% in November. As a result, prices were close to the all-time high recorded in the summer of 2022 as the year drew to a close.
“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. The first-time buyer share of house purchase activity was above the long run average, supported by easier credit availability, with the share of high loan to value lending (i.e. with a deposit of 15% or less) reaching its highest level for over a decade.
Regional trends
“Annual house price growth in Northern Ireland outpaced the rest of the UK by a wide margin, averaging 11% in the first nine months of the year, almost four times faster than the 3% recorded in the UK as a whole and more than double the 5.1% recorded in the next strongest performing region (the North of England). This strong performance mirrored that in the border regions of Ireland over the same period.
“Despite these significant price gains, house prices in Northern Ireland are still around 6% below the all-time high recorded in 2007, while UK prices are almost 50% higher over the same period. As a result, the price of a typical home in Northern Ireland is currently around 79% of the UK average price, while in 2007 it was around 25% higher.
“Wales broadly matched the wider UK trend in 2025, while Scotland saw a marginally stronger rate of house price growth.
“London was the weakest performing region in the first nine months of the year with annual growth averaging 1.3%. This was part of a wider trend that saw house price growth in the northern regions of England outpacing the southern regions.
“As a result, the price differential narrowed to its lowest since 2013. The average price of a home in northern regions of England is now almost 58% of that in the southern regions, well above the lows of c48% seen in 2017.
Views on 2026
“Looking ahead, we expect housing market activity to strengthen a little further as affordability improves gradually via income growth outpacing house price growth and a further modest decline in interest rates. We expect annual house price growth to remain broadly in the 2% to 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.”
High end to struggle
Chris Barry, Director at London-based Thomas Legal, said the predictions from Nationwide are sensible, adding that cheaper areas of the UK could continue to outperform next year.
He said: “As house prices have become increasingly out of range for both residential homes and buy-to-let investment, people are migrating towards areas that have yet to see a boom.
“The result of this is that comparably cheaper parts of the country look set to experience bigger rises next year, while property around the £2m mark is likely to continue declining.
“Wages are exceeding house price growth and borrowing costs are expected to come down, which will lead to a continued resilient market in 2026. The one potential issue is if we see a sharp rise in unemployment, as that will hit sentiment.”
Samuel Mather-Holgate, Managing Director at Swindon-based Mather and Murray Financial, believes the Nationwide could be underestimating house price growth if the Bank of England continues to cut rates after an expected cut this week.
He said: “2025 has been a sluggish year for the property market overall but if the base rate falls to 3.5% or below in early 2026, demand could be ignited and, with it, prices.
“I’d say the Nationwide’s estimate is conservative if we get the policy easing many expect as the Bank of England seeks to desperately stimulate a flailing economy.”
Misnomer
Kundan Bhaduri, Entrepreneur, Investor and Landlord at London-based The Kushman Group, claimed the word ‘resilience’ is a misnomer.
He said: “Nationwide is celebrating ‘resilience’ in a market where transaction volumes remain artificially propped up by first-time buyers accepting whatever mortgage terms they can secure, while established homeowners stay frozen in place by punitive moving costs.
“Predicting steady growth is all good on paper but it assumes that buyers will return as and when affordability improves, but this overlooks the fact that properties remain expensive relative to earnings and mortgage rates remain elevated.”
Photo by Andrey Soldatov on Unsplash
