Monitoring the housing market and activity in the mortgage market, is very important for many, particularly those doctors and dentists who are looking to purchase their first home or who are investing in buy-to-let properties. Our monthly Property Price & Mortgage Update gives you a summary of what the experts are saying.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it.
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UK Property Market Update
According to Nationwide, UK House price growth slowed to .6% last month, with December’s price growth falling from November’s 1.8%. This led to a price decrease of -0.4% month-on-month. The average house price came in at £271,068, down slightly from £272,998 in November.
A look back at the market in 2025
As 2025 drew to a close, the UK housing market slowed slightly, but that shouldn’t distract from the bigger picture, because if there’s one word that sums up the year as a whole, it’s resilience.
Buyer confidence remained cautious for much of the year since households were still feeling the impact of higher living costs, and mortgage rates sat at around three times their post-pandemic lows. Yet despite this, activity held up far better than many expected. Mortgage approvals stayed close to pre-COVID levels, reinforcing the depth of underlying demand.
One of the biggest influences on market behaviour came early in the year. Stamp duty changes introduced in April prompted a rush of activity in March, as buyers moved quickly to complete purchases ahead of higher tax bills. Unsurprisingly, this was followed by a quieter spring and summer. However, once the timing effects faded, it became clear that demand hadn’t disappeared; it had simply shifted.
Affordability slowly turned a corner
One of the more encouraging trends in 2025 was a gradual easing in affordability pressures. House prices continued to grow at a relatively modest pace, while earnings rose more quickly. At the same time, mortgage rates edged lower over the course of the year.
This combination helped support buyer activity, particularly among first-time buyers. Their share of purchases rose above the long-term average, helped by improved access to credit. High loan-to-value lending, where buyers put down deposits of 15% or less, reached its highest level in over a decade – a clear sign that lenders were becoming more comfortable supporting new entrants to the market.
Regional house growth
Regional performance told a familiar story, with price growth across the UK remaining modest in most regions, but at a regional level, the picture continued to diverge.
East Anglia was the only part of the country to record an annual price fall, down 0.8%. While notable, this marked the first regional decline since mid-2024 and had little impact on the broader national trend.
At the other end of the spectrum, Northern Ireland stood out once again. Prices there rose by 9.7% over the year, far outpacing the UK average and extending a run of strong performance. Even with these figures, prices in Northern Ireland remain below their 2007 peak, and the average home still costs considerably less than the UK average – a stark contrast to the position nearly two decades ago.
Scotland broadly mirrored the national picture with annual growth of 1.9%. Wales saw a slight acceleration to 3.2%, making it one of the stronger performers in 2025.
In England, growth continued to slow, with prices rising by 1.2% year on year. Northern regions generally outperformed the south, with the North West emerging as the strongest English region. Southern England, including London, continued to lag. London prices rose by just 0.7% over the year, while East Anglia remained the weakest-performing region overall.
Flats continued to fall behind
Another clear theme of the year was the ongoing underperformance of flats. While semi-detached and detached homes saw solid price increases, flat prices fell by almost 1% over the year.
This is not a new trend. Over the past decade, flats have seen far weaker price growth than houses, particularly terraced properties. London’s prolonged underperformance has played a role, but shifting buyer preferences have also mattered. Since the pandemic, demand for space has remained elevated, and that shift has only partially reversed.
On top of this, rising service charges, ground rents, and maintenance costs have made flats less attractive to many buyers, particularly first-time purchasers who are already navigating tight affordability constraints.
What could 2026 bring?
Looking ahead, there are reasons for cautious optimism. If earnings continue to outpace house prices and mortgage rates edge lower, affordability should improve further in 2026. That should help support a modest uplift in market activity, with annual house price growth expected to sit somewhere between 2% and 4%.
Recent Budget announcements are unlikely to materially change the outlook. Proposed council tax surcharges on high-value properties won’t take effect until 2028 and will apply to a relatively small share of homes. However, higher taxes on rental income may discourage some buy-to-let investors, potentially limiting new rental supply and keeping upward pressure on rents.
Overall, while 2025 may not have been a headline-grabbing year for the housing market, it demonstrated a level of stability that few would have predicted twelve months earlier – and that sets a more constructive tone for the year ahead.
Mortgage Rate Update
Following the Monetary Policy Committee (MPC) meeting on 17 December, the Bank of England announced a rate reduction to 3.75%.
The MPC voted 5-4 in favour of reducing the Bank Rate by .25 percentage points. Four members voted to keep the rate at 4%. The current rate is the lowest level in almost three years, but further reductions will require careful consideration, according to the Bank of England.
It’s crucial to stay informed by monitoring the British economy and global developments closely, as these factors majorly influence the Monetary Policy Committee’s (MPC) decision-making. Also taken into consideration are the speed at which prices are rising, the pace of economic growth, and employment statistics.
The next decision will be announced on Thursday, 5 February 2026.
Mortgages for Doctors and Dentists – Try Our Finder Tool
If you are planning to buy or sell property, contact an advisor for personalised mortgage advice.
Use our new and updated Mortgage Tool to search for a deal that suits your circumstances.
At Dental & Medical Financial Services, our advisers are dedicated to helping our clients select the right mortgage deal for your needs. If you are ready to take the fist step toward home-buying, contact us today.
Stay in the know
If you’re planning to buy or sell property this year, check back monthly for our regular update on the nation’s property prices and mortgage rates and contact one of our advisers for personalised advice.
At Dental & Medical Financial Services, our experts are dedicated to helping our clients select the right mortgage deal for their needs. If you’re ready to take the first step toward home-buying, get in touch with us today.
Sources
(1) Figures quoted from Nationwide House Price index – December 2025
