UK house prices unexpectedly fell in December, pushing annual growth to its weakest level since April 2024, according to figures from Nationwide Building Society,

despite signs that improving affordability is helping to support demand.

Prices slipped 0.4% month-on-month in December, leaving the average home just 0.6% higher than a year earlier. Economists polled by Reuters had expected a 0.1% monthly rise and annual growth of 1.2%, following a 1.8% increase in November.

Nationwide’s chief economist, Robert Gardner, said the slowdown partly reflected strong price gains in December 2024, as well as the latest monthly decline. He added that mortgage approvals remained broadly in line with pre-pandemic levels.

“With price growth well below the rate of earnings growth and mortgage rates continuing to edge down, affordability constraints have eased somewhat, helping to underpin buyer demand,” Gardner said.

Nationwide expects annual house price growth of between 2% and 4% in 2026.

Elliott Jordan-Doak, an economist at Pantheon Macroeconomics, said prices were likely to regain momentum in the coming months. He pointed to the November budget by finance minister Rachel Reeves, which limited property tax rises to the most expensive homes, easing fears of a broader tax hit to buyers.

He also noted that the Bank of England’s December interest rate cut would become more visible in early 2026 data. The BoE lowered its main rate to 3.75% from 4% on December 18, and markets expect one or two further quarter-point cuts this year.

The average UK property price in the final quarter of last year stood at £273,077, though regional disparities remained stark. Prices averaged £168,317 across much of northern England, compared with £529,372 in London, where values rose 0.7% over the year.

Northern Ireland recorded the strongest annual growth at 9.7%, reflecting spillover effects from price gains in the Republic of Ireland. By contrast, eastern England saw the weakest performance, with prices falling 0.8% over the year.