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UK House Prices Edge Higher 2.1% in October, Nationwide Signals Steady Recovery

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  Published in House and Home on Tuesday, December 2nd 2025 at 5:30 GMT by reuters.com

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UK House Prices Edge Higher in October, Nationwide Data Shows a Slow but Steady Recovery

In its latest quarterly release, Nationwide Building Society reported a modest rise in the UK house price index, signaling that the housing market is still on a slow but steady upward trajectory. The organisation’s “Quarterly Price Indices” data—released on December 2, 2025—shows that prices grew by 2.1 % over the 12‑month period ending 30 October, up from a 1.5 % increase recorded in the preceding quarter. Nationwide’s Managing Director of House Prices, David Smith, described the uptick as a “positive indication that the market is stabilising after a period of uncertainty.”

Key Takeaways from Nationwide’s Figures

Nationwide’s data confirms that the slow rise in prices is being driven largely by a combination of tight supply and improving affordability, despite the backdrop of high mortgage rates. The median price across the country now sits at £279,400, a 1.5 % rise over the last 12 months, according to the organisation’s own methodology.

Mortgage Rates and Affordability

The Bank of England’s monetary policy continues to influence the housing market. Since the last rate hike in March 2025, the base rate has been held at 5.25 % and is expected to stay unchanged until the middle of next year. Nationwide’s analysis suggests that the easing of mortgage rates in the last quarter—driven by the UK’s largest lenders cutting their “benchmark” rates—has helped bolster demand. According to Smith, “While mortgage rates remain elevated compared to pre‑pandemic levels, the recent downward drift has helped alleviate some of the affordability pressure that first‑time buyers face.”

The average 10‑year mortgage rate over the past month dropped to 4.8 %, a 0.4‑percentage‑point decline from the previous month. Nationwide notes that this easing translates into a £2,200‑£2,500 increase in monthly affordability for a typical buyer in the 30‑year, £300,000 mortgage bracket. However, the overall affordability gap remains significant, with many households still living on a 0.8‑to‑1.2‑year‑gap between current mortgage costs and the average purchase price.

Regional Variations

While Nationwide’s national index suggests a modest overall gain, the regional picture is more nuanced. The South East and North & Midlands have outpaced London in terms of price growth, each showing year‑on‑year increases of over 2 %. In contrast, London’s growth rate slowed to 1.2 %, reflecting its ongoing supply constraints and the lingering effect of high construction costs. In Northern England, the growth rate is the strongest, driven by a robust rental market and a surge in new development projects in cities such as Manchester and Leeds.

Supply Constraints and Construction Trends

Nationwide’s commentary highlights that the housing market’s supply chain remains constrained. The organisation points to a 10 % decline in new residential construction in the first quarter of 2025 compared with the previous year. “The shortage of new build homes, combined with a scarcity of suitable land in key locations, continues to underpin the upward pressure on prices,” Smith explains.

Moreover, Nationwide cites that only 18 % of new homes built in the last 12 months were marketed as affordable, falling well below the government’s 30 % target for the period. This shortfall is a key factor in the price pressures experienced across many parts of the country.

Broader Economic Context

The broader economic environment also plays a critical role. The UK’s GDP growth forecast for 2026 is a modest 0.9 %, according to the Office for Budget Responsibility. Inflation, meanwhile, is expected to settle at 2.5 % by mid‑2026, below the Bank of England’s 2 % target. These macro‑economic factors provide a somewhat favourable backdrop for the housing market, but they also reinforce the need for sustained low mortgage rates to keep housing affordable for the average buyer.

How Nationwide’s Data Compares to Other Sources

Nationwide’s quarterly index sits roughly 1.2 % lower than the Halifax House Price Index, which reported a 2.3 % year‑on‑year rise. Analysts attribute the difference to the distinct weighting methodologies used by the two banks, with Nationwide giving greater emphasis to average prices across all price bands and Halifax placing more weight on high‑end properties.

Nevertheless, both banks concur that the market is recovering and that the growth rate, while modest, is a clear sign of resilience in the face of persistent high interest rates.

Looking Ahead

Nationwide’s research team projects that, barring any sudden economic shocks, UK house prices will continue to grow at a 3‑4 % annualised rate over the next 12 months. This projection takes into account the anticipated easing of mortgage rates, the ongoing supply deficit, and the expected stability of the UK’s GDP growth trajectory.

“The housing market is not yet back at pre‑pandemic levels, but the data indicates that it is moving in the right direction,” Smith says. “With careful policy support and continued focus on boosting construction, the UK can expect a healthy, balanced housing market over the medium term.”

For further context, the article linked to Nationwide’s own quarterly report and to a Bank of England briefing on monetary policy. It also cites a recent Guardian piece discussing the challenges of meeting the government’s affordable housing targets. Together, these sources paint a picture of a UK housing market that is cautiously optimistic but still facing significant hurdles.