Budget speculation around property taxes contributed to a drop in home buyer demand and sales across the country, according to Zoopla’s latest House Price Index.
Rumours of more taxes on homes over £500,000 in the run up to the Budget created uncertainty across the housing market, leading to a 12% decline in buyer demand and fewer sales agreed in the four weeks up to 23rd November, compared with last year.
The Budget’s impact on house prices has been felt across southern England where, for the first time in 18 months, there has been a year on year fall in house prices across London (-0.1%), the South East (-0.1%) and the South West of England (-0.2%).
In contrast, the broader UK housing market continues to show resilience. Average UK house prices have increased by 1.3% year on year with the average price of £270,200. Most regions and counties outside the south of England are registering above average price inflation with home values in the North West of England 2.9% higher than a year ago.
Post-Budget relief for owners of homes over £500,000
The market uncertainty that plagued the past few months has been largely dissolved following the Autumn Budget, with the measures directly impacting the housing market proving less significant than many home owners had feared from the speculation.
Crucially, the shelving of any proposals for a new annual property tax on homes over £500,000 will be welcome relief for the owners of the 210,000 homes for sale above this level across the UK. Zoopla says the removal of the threat of extra taxes is set to deliver a much needed boost to buyer demand and overall market activity at the start of 2026.
Stamp duty ‘fiscal drag’ for housing
While the threat of wider tax changes impacting the mainstream housing market has been removed, stamp duty remains a significant hurdle for home buyers, especially in southern England. The stamp duty price thresholds for existing home owners were set in 2014, while house prices are 47% higher over this time. This is creating ‘fiscal drag’ for home buyers in the housing market with buyers of average priced homes paying more.
Since 2019, the number of homes bought by existing homeowners where the cost of stamp duty is more than 2.5% of the purchase price has jumped from 21% to 33%.
Richard Donnell, executive director at Zoopla, said: “The Budget bark was worse than the Budget bite for the housing market. Home buyers and sellers will welcome the end of the uncertainty that has stalled housing market activity since the late summer. Our data shows the underlying demand to move home remains strong. With greater certainty we expect a rebound in housing market activity that builds into the new year with households who paused home moving decisions over recent months return with greater confidence.
“The removal of the threat of a new annual property tax from 210,000 homes is particularly positive for the market and will help revive activity in higher-value areas across southern England where house prices are under pressure.”
