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House-price growth slows to its lowest in over two years, yet remains positive

  //house-home.news-articles.net/content/2025/12/1 .. west-in-over-two-years-yet-remains-positive.html
  Published in House and Home on Wednesday, December 17th 2025 at 7:47 GMT by This is Money
      Locale: England, UNITED KINGDOM

House‑price growth slows in October, but the market remains upbeat – what the numbers mean for buyers, sellers and the wider economy

In the most recent release from the UK’s main house‑price gauges, Nationwide and Halifax, the trend that has dominated headlines for the past year – a steep rise in property values – has finally hit a pause. While the October figures still show a modest increase, the rate of growth has decelerated to its lowest level in more than two years. The slowdown comes amid growing uncertainty about the Bank of England’s (BoE) forthcoming policy decisions, the UK’s upcoming budget, and the continuing volatility in mortgage rates. Below we unpack the key take‑aways from the new data, the underlying factors driving the change, and the likely ramifications for homeowners, potential buyers, and the economy at large.

1. The headline numbers: Nationwide and Halifax both report a modest 0.5% rise in October

Both major providers of the UK’s house‑price index (HPI) recorded a 0.5% increase in the average price of properties in October. Nationwide’s figure was slightly higher – 0.8% – but still well below the 1.3% rise seen in September. Halifax, meanwhile, confirmed that its index rose by 0.5%, the lowest growth since January 2022.

When combined with the 0.9% rise in September, the two‑month period of October‑November saw a 1.4% rise in overall house prices, a figure that, while still positive, signals a clear deceleration from the near‑double‑digit gains seen during the pandemic‑era surge.

The slowdown is largely concentrated in the South East and London, where the price index for the region fell by 0.6% month‑on‑month, the steepest decline in over a decade. In other parts of the country – such as the North West, Yorkshire, and the Midlands – the pace of growth has largely held steady.

2. What’s driving the slowdown? Three key forces

Mortgage rates climb higher
The BoE has kept its base rate at 5.25% for over a year, and the market is now gearing up for another hike, with the first cut expected in 2025. Mortgage providers have already raised rates across the board, and the average cost of a 5‑year fixed mortgage rose to 6.6% in October from 6.1% in September. The resulting squeeze on affordability means buyers are pulling back, and sellers are becoming more cautious in pricing their properties.

Government budget rumours add uncertainty
The UK Treasury’s forthcoming budget is widely expected to address a range of issues that directly affect the housing market: property tax reforms, planned cuts to the Help to Buy scheme, and a potential tightening of the UK’s new home construction strategy. The uncertainty about the policy direction has led both investors and individuals to adopt a “wait‑and‑see” approach.

Supply constraints are tightening
Construction data shows that the number of approved new homes in October fell by 3.1% year‑on‑year, the steepest decline in over 25 years. Even though the government has announced a 20% increase in the annual house‑building target, the bottleneck – from planning approvals to supply chain disruptions – means that demand may outpace supply for at least the next 12‑18 months. This imbalance keeps the market from cooling dramatically.

3. Implications for different stakeholders

4. Where the market is heading

Short‑term outlook
Most economists predict that house‑price growth will stay positive but sluggish over the next 12 months. The Bank of England is likely to keep rates elevated until the inflationary pressures subside, which will continue to keep borrowing costs high. Meanwhile, a modest rebound in the supply of new homes could temper the decline in demand.

Long‑term prospects
Even though October’s figures indicate a slowdown, the overall trajectory of house prices remains upward over the long run. Historically, the UK market has seen a consistent average annual increase of around 3–4% when adjusted for inflation. However, the speed of this growth is highly sensitive to macro‑economic conditions, such as interest rates and employment levels.

5. Key take‑aways for readers

• House prices have slowed but are still rising – October saw a 0.5% increase, down from 1.3% in September.
• Mortgage rates and policy uncertainty are the primary drivers – higher borrowing costs and an uncertain budget reduce buyer confidence.
• Regional variations are significant – London and the South East saw a sharper decline than other areas.
• The long‑term outlook remains positive but slower – investors can expect a gradual increase in value, but the pace will be moderated by the macro‑economic environment.

In sum, while the news of a deceleration in house‑price growth may dampen some optimism, it is by no means a sign that the UK housing market is turning. Instead, it reflects the natural ebb and flow of a sector that has been under pressure from multiple fronts – higher rates, budget uncertainty, and supply constraints. For homeowners, buyers, and investors alike, the message is clear: stay informed, stay patient, and keep an eye on how policy decisions unfold in the coming months.