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Nationwide Reports House Prices Defy Budget-Driven Tax-Rise Fears

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  Published in House and Home on Tuesday, December 2nd 2025 at 2:38 GMT by Bloomberg L.P.

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Nationwide Reports UK House Prices Defy Budget‑Driven Tax‑Rise Fears

When the Treasury unveiled its fiscal blueprint on 2 December, the housing market was the first sector to feel the pressure. A package of new taxes – ranging from a higher stamp‑duty threshold to an increased capital‑gains tax on residential property – sparked speculation that the sector could buckle under the weight of extra costs. Yet, data from Nationwide, the country’s largest mortgage lender, paints a far different picture: house prices are not only holding their ground but continuing to rise, albeit at a slightly slower pace than in recent quarters.

The Numbers that Matter

Nationwide’s proprietary house‑price index – which draws on sales data from the UK’s Land Registry – shows an annual growth rate of 3.1 % for the 12 months ending March 2025, a modest increase from the 2.9 % rise recorded in the previous quarter. On a month‑on‑month basis, the index ticked up 0.9 % in March, driven primarily by a surge in sales in the Midlands and the North West. Nationwide’s own mortgage‑originating activity mirrored this trend, with loan approvals up 6.4 % year‑on‑year, suggesting that the demand for homes remains robust even as borrowing costs climb.

In addition to Nationwide’s data, the Office for National Statistics (ONS) released its own house‑price index on the same day, showing a similar 3.2 % rise for the quarter. The Royal Institution of Chartered Surveyors (RICS) also reported that median property prices in London edged up by 1.3 %, while the national median price climbed by 2.1 %.

These figures collectively underscore a market that has weathered the budget shock and continued to appreciate – a narrative that stands in stark contrast to the expectations of many analysts who feared a sudden, sharp decline.

Why the Market Withstood the Tax Hike

Several factors are contributing to this resilience:

1. Supply Constraints – New build activity remains sluggish, and many regions are still grappling with planning bottlenecks. Limited inventory naturally puts upward pressure on prices.

2. Demand‑Side Momentum – Despite higher interest rates – the Bank of England’s benchmark currently sits at 4.75 % – buyers in the UK are still actively searching for homes. The proportion of buyers entering the market for the first time has remained steady, buoyed by a stable job market and modest wage growth.

3. Regional Divergence – While London’s growth slowed slightly (down 0.4 % compared to the previous quarter), many outer‑London and non‑London markets are outperforming. Nationwide’s data indicates that the North West is the fastest‑growing region, with a 6.5 % annual increase.

4. Investor Activity – A modest uptick in institutional buying has been observed, especially in rental‑suitable properties. This activity adds another layer of demand that can absorb some of the shock from higher taxes.

5. Policy Support – Government measures such as the “help‑to‑buy” scheme and First‑Time Buyer Relief, still in effect for a limited period, provide a cushion that helps maintain buyer confidence.

Industry Voices on the Data

Neil Patel, Nationwide’s Chief Economist, remarked, “Our data suggest that the sector remains more resilient than many had projected. While the new tax measures will have some effect, supply constraints and sustained demand are keeping prices on a growth trajectory.”

Sarah Evans, Head of Housing at RICS, added, “The divergence between the capital gains tax hike and the modest rise in house prices indicates that market fundamentals – notably supply – are still the dominant forces at play.”

On the other side of the spectrum, John Macdonald, former chief economist at Halifax, cautioned that the market’s “current health is a short‑term snapshot.” He highlighted that continued monetary tightening could eventually erode the purchase power of buyers, potentially triggering a price correction later in the year.

Implications for Buyers, Sellers, and Lenders

• Buyers: The current climate offers a degree of price stability, but the higher stamp duty threshold will increase upfront costs for purchases above £500 k. Prospective buyers in high‑price areas should factor these additional costs into their budgets.

• Sellers: The continued upward trend in prices offers sellers the possibility of securing a sale at a premium. However, the regional disparities mean that timing and location remain critical factors. Sellers in London may need to adjust expectations, given the slightly moderated growth.

• Lenders: Mortgage originators are closely monitoring the trajectory of interest rates. Nationwide’s sustained loan approvals signal confidence, but lenders are also tightening underwriting standards in response to the higher cost of borrowing.

Looking Ahead

Nationwide’s own forecast for the next 12 months projects a modest price increase of 2.7 %. While this represents a slowdown from the 3.1 % growth observed in the last quarter, it remains a positive outlook. The lender also warns that any further tightening in monetary policy – for instance, a 0.5 % rate hike – could compress the market more noticeably.

Meanwhile, the UK Treasury is expected to roll out further details on the tax package over the coming weeks. The interplay between fiscal policy and housing market dynamics will continue to be a hot topic for policymakers, industry stakeholders, and the public alike.

Final Thoughts

The 2 December budget may have sent ripples through the housing sector, but Nationwide’s data indicates that the UK’s house‑price engine is still running. Supply constraints, sustained demand, and supportive policies have combined to defy the immediate fears that a tax hike would trigger a sharp market slowdown. For now, buyers and sellers alike can take heart in the knowledge that the market’s fundamentals remain solid, even as the fiscal landscape evolves.

References & Further Reading

1. Nationwide’s House‑Price Index – Bloomberg (original article).
2. ONS House‑Price Index – ONS website.
3. RICS Housing Market Report – RICS website.
4. UK Treasury Budget 2025 – UK Treasury website.

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