The UK housing market showed further signs of recovery in September 2025, with average house prices rising by 0.5% month-on-month, according to the latest data from Nationwide Building Society.
This increase lifted the average property value to £271,995, surpassing Capital Economics’ forecast of a 0.2% gain and reversing August’s 0.1% decline. On an annual basis, prices grew 2.2% year-on-year, up slightly from 2.1% in August — signalling renewed stability following a subdued summer.
Market Regains Momentum After Summer Lull
Robert Gardner, Nationwide’s Chief Economist, noted that the housing market appears to be entering a phase of “broad stability” after several months of weaker growth.
“The number of mortgages approved for house purchase has hovered around 65,000 per month, close to the pre-pandemic average,” Gardner said.
“Low unemployment, rising wages, and resilient household balance sheets continue to support demand. If the Bank of England lowers rates in the coming quarters, borrowing costs could moderate further.”
These factors combined suggest that the UK property market may be turning a corner, with both buyer confidence and affordability showing gradual improvement.
Regional Trends Show a Mixed Picture
Nationwide’s quarterly regional data paints a varied picture across the UK.
- Northern Ireland recorded the strongest growth, with house prices climbing 9.6% in the three months to September — the fastest regional increase in the UK.
- England, meanwhile, saw growth slow to 1.6%, down from 2.5% in the previous quarter, reflecting a more cautious recovery across southern regions.
Karen Noye, mortgage expert at Quilter, commented that while market conditions have improved modestly due to easing inflation, affordability pressures remain the biggest challenge for families and first-time buyers.
“The market is still just grinding forward rather than racing ahead,” Noye said. “Any progress is likely to be gradual.”
Interest Rate Pause and Budget Uncertainty Keep Buyers Cautious
The Bank of England maintained its base rate at 4% last month, following five rate cuts since summer 2024 that have helped reduce borrowing costs. However, Governor Andrew Bailey warned that persistent inflation (3.8% in August) remains a concern and could delay further rate reductions.
Jason Tebb, President of OnTheMarket, said that while lower mortgage rates have encouraged some buyers back into the market, upcoming budget announcements are creating short-term caution.
“Activity remains steady, with serious buyers and sellers moving ahead,” he said. “However, average prices are being held in check as buyers use their position to negotiate.”
Amy Reynolds from Antony Roberts Estate Agents added that many buyers are delaying decisions until the government’s budget on 26 November, anticipating potential changes to property taxation.
Affordability and Policy Changes May Limit Future Growth
Speculation is growing that Chancellor Rachel Reeves could introduce new property tax measures, including a potential levy on homes valued above £500,000, which could weigh on higher-end transactions.
At the same time, major developers are reporting signs of slower buyer activity.
Taylor Wimpey revealed that its net private sales rate fell to 0.65 per outlet per week in the nine weeks to 28 September, compared with 0.7 a year earlier — attributing the dip partly to budget-related uncertainty.
While September’s uptick provides reassurance that the market has avoided a sharp correction, analysts caution that ongoing affordability constraints, high house prices, and fiscal uncertainty will likely limit the pace of recovery into early 2026.
Outlook: Gradual Recovery Ahead for UK Housing Market
For now, the data suggests a stabilising property landscape, supported by a resilient economy and modestly improving sentiment. Should inflation continue to ease and the Bank of England move towards further rate reductions, 2026 could mark a period of steady, sustainable growth.
Families considering refinancing or home upgrades may also explore remortgaging options to secure lower fixed-rate deals before the next market cycle begins.
