As the year draws to a close, it is useful to highlight the positives and negatives that this year has witnessed for the property industry. It has been a noteworthy year. Important national policies have been passed under the Renters’ Rights Bill and Autumn Budget, the effects of which are yet to be fully seen. Down are the record-setting high mortgage rates that held a vice-like grip on the property market since 2023. Upticks in property market activity have been observed throughout much of 2025, driven primarily by continued demand and lowered affordability pressures.
‘The word that best describes the housing market in 2025’, Robert Gardner, the chief economist at Nationwide, observed, ‘is “resilient”’. That word captures the ethos of the 2025 UK property market, and it is that condition which informs how analysts perceive the future performance of the UK housing market in 2026.
Market Performance
Generally speaking, the UK property market has seen notable gains in many key metrics, yet it is equally important to stress that the market has shown signs of decline. This is especially apparent when contrasting the former and latter halves of the year.
For example, the number of new sellers entering the market in the first half of 2025 rose by 9% when compared to the same period in 2024. This momentum, however, faded when looking at the second half of the year, with 2025 seeing a –4% fall when compared to the same period in 2024.
Following a similar pattern is the aggregate buyer demand across the property market. Buyer demand was 3% higher in the first half of 2025 compared to the same period in 2024. The second half of the year for 2025 witnessed a –6% fall compared to the same period last year.
Similarly, the volume of listings has negligibly increased from 1,649,032 in 2024 to 1,652,443 in 2025, though it is worth noting that the 2025 figure is 7.3% higher than the nine-year average.
Nationwide has observed that annual price growth declined from 4.7% at the end of 2024 to 2.1% by the summer of 2025, after which point property price growth fell to 1.8% towards the end of the year.
Consequently, the average new seller asking price in December 2025 is £358,138, down from the £364,833 average asking price in December 2024. Examining the details further, this represents a –1.8% month-on-month and –0.6% year-on-year growth.
Such an annual decline has been particularly noteworthy for first-time buyers, with average property prices falling from £225,057 in 2024 to £221,950 in 2025. Second steppers and top of the ladder buyers experienced less of an overall fall in property prices between 2024 and 2025. For the former, the average price declined from £335,968 in 2024 to £334,297 in 2025; for the latter, the average price fell from £643,415 in 2024 to £632,131 in 2025.
The data shows that the property market started off strong before exhibiting signs of stagnation. Part of what drove high property activity in the first half of the year – especially January to March – was the urgency to finalise property exchanges before stamp duty thresholds were lowered in April. After that period, activity continued to hold firm until the winter, when buyer activity noticeably reduced in light of the uncertainty and speculation arising from the Renters’ Right Bill and the Autumn Budget.
Future Expectations
Even though market activity has dwindled over the past quarter, some industry observers have noted that there is an expectation that property exchanges will increase in 2026. For example, the latest RICS survey identified that a net balance of +15% anticipates sales to increase over the next year.
Zoopla has identified that the property sales have reached ‘the largest sales pipeline in four years, with two in five customers either ‘in the market’ or on ‘watch’ to purchase a property. Depending on how market conditions unfold, this could drive an increase in property exchanges over the next year – or at the minimum keep sales steady at around 1.15m. UK Finance, meanwhile, is less inclined to view a significant uptick in sales, forecasting that there will be around 10,000 fewer property exchanges in 2026.
Nationwide expects that the average property prices will rise between 2% and 4% in 2026, with Gardner arguing that the changes to property taxes ‘are unlikely to have a significant impact on the market’. In contrast, Halifax has placed the projected figures lower between 1% and 3%. Amanda Bryden, head of Halifax Mortgages, said: ‘While wage growth is expected to slow and unemployment may edge higher, lower interest rates and easing inflation should help to gradually improve homebuyers’ purchasing power.’
What is widely expected to fall are mortgage rates. The average two-year fixed mortgage rate is now 4.33%, compared to 5.08% last year, and this is expected to influence mortgage rate reductions over the next year.
This is expected to be influenced by the Bank of England continuing to gradually lower the bank rate, with James Smith, a developed market economist at ING Economics, commenting that, in addition to expecting the bank rate to fall to 3.75% on the 18 December committee meeting, ‘We current expect further cuts in February and April next year, taking the policy rate down to 3.25%.
Concluding Remarks
Going back to the position taken by Gardner, the property market has been resilient over the past year. The data shows that the start of the year was strong, characterised by high demand and market participation, before gradually losing momentum during the latter half of the year, during which time market activity contracted despite seasonal fluctuations.
Yet despite the less impressive cap off to 2025, the next year is expected to remain steady relative to market conditions. It is widely expected that mortgage rates will continue to ease, while property prices and exchanges are expected to remain firm. The scale of these projections is subject to ongoing debate, but undergirding these forecasts is the expectation that the market will continue to be resilient throughout 2025.
