The UK housing market has entered a new period of uncertainty, with buyers and sellers pausing in the run-up to the Autumn Budget. After a year of tentative recovery following the last round of stamp duty changes, momentum appears to have stalled once again as speculation grows over potential tax reforms.
Official figures from the Office for National Statistics and HM Land Registry show that average house prices rose by 3% in the 12 months to August, down slightly from 3.2% annual growth in July. More recent data from Halifax paints a similar picture, reporting a 0.3% monthly fall in prices in September, taking the average UK home to £298,184 — around £794 lower than the previous month.
According to Tom Bill, head of UK residential research at Knight Frank, “high levels of supply and a growing sense of uncertainty as November’s Budget approaches are both keeping downwards pressure on demand and prices.”
High-End Homes Hit Hardest
The top end of the market appears to be bearing the brunt of pre-Budget jitters. Speculation that Chancellor Rachel Reeves could introduce a new property tax on homes worth more than £500,000 has led to a sharp slowdown in transactions. The measure, if confirmed, could replace the current stamp duty system and has already deterred some sellers and buyers from acting.
Data from Zoopla shows that demand for homes priced above £500,000 fell 11% in the five weeks to 29 September, while new listings dropped by 9% over the same period. Across this price bracket, buyer interest has dipped 4%, and new listings are down 7%.
The Treasury has declined to comment on any forthcoming changes, but uncertainty alone appears to be enough to dampen confidence at the upper end of the market.
Cooling Growth and Weaker Sentiment
The latest RICS (Royal Institution of Chartered Surveyors) sentiment survey shows buyer demand and agreed sales both remained in negative territory for the third consecutive month in September.
In response to these shifts, major forecasters have revised their outlooks. Savills now expects house prices to rise by just 1% in 2025, down from its earlier projection of 4%, citing the lingering effects of stamp duty changes, broader economic headwinds, and Budget-related caution. Knight Frank has also scaled back its expectations, trimming its 2025 forecast from 3.5% to 1%.
“Stable mortgage rates have supported activity so far this year,” said Bill, “but a repeat of last year’s game of ‘guess the tax rise’ ahead of the Budget means hesitancy will rise over the next two months.”
Despite the slowdown, average property prices remain near record highs. According to the Land Registry, the average UK home cost £270,000 in September — about £8,000 higher than a year ago.
Mixed Signals from the Indices
Five major house price indices track the UK property market, but the Land Registry remains the most comprehensive source because it includes both cash and mortgage-funded transactions. The downside is its six-week lag, meaning lenders like Nationwide and Halifax often provide a more up-to-date snapshot of market conditions.
Meanwhile, the ONS “House Prices in Your Area” tool, which draws on Land Registry data, remains a useful way for homeowners to track local trends, showing wide variation between regions.
Asking Prices and Market Sentiment
Asking price data — often a barometer of market sentiment — tells a similar story. Figures from Rightmove show average asking prices in October were up 0.3% month-on-month, below seasonal norms, suggesting sellers are tempering their expectations.
“With so many homes on the market, especially in southern England, this remains a buyer’s market,” said Matt Giggs, founder of estate agency The Giggs Group. “Sellers who reduced their price expectations over the summer are now creating more realistic conditions for sales, which is keeping things moving.”
While 2025 looks set to be a subdued year, most analysts expect growth to resume from 2026 onward. Savills forecasts prices will rise 4% in 2026, 6% in both 2027 and 2028, and 5.5% in 2029, underpinned by rising wages — predicted to grow 22% between 2025 and 2029 — and an improving economy.
Falling mortgage rates and more relaxed affordability rules could also provide a lift. Under updated guidance from the Bank of England, lenders are now permitted to issue a higher proportion of loans above 4.5 times a borrower’s income, potentially allowing buyers to borrow an average of £28,000 more.
Knight Frank takes a slightly more conservative view but still expects gradual acceleration, with growth of 3% in 2026, 4% in 2027, 4.5% in 2028, and 5% in 2029.
Uncertainty Over Property Taxes
Perhaps the biggest wildcard for the market remains the possibility of a major shake-up to property taxation. Rumours suggest that stamp duty could be replaced by an annual property levy for homes worth more than £500,000, while the capital gains tax exemption on primary residences above £1.5 million could also be reviewed. Some landlords fear additional costs if National Insurance is extended to rental income.
Zoopla believes that if such changes are introduced, they would hit the higher-value markets hardest. In August, regions where homes average less than £200,000 saw price growth of 2.8%, while those with average values above £500,000 “barely moved.”
“Our data shows both buyer demand and new listings for homes priced above £500,000 are down compared with a year ago, as some buyers pause to see what the Autumn Budget may bring,” said Richard Donnell, executive director of research at Zoopla.
While speculation about new property taxes dominates headlines, experts warn that acting on rumour could backfire. Any major tax reform could take months or years to come into effect, and history suggests that housing markets tend to stabilise once clarity returns.
For now, the message from analysts is consistent: while house price growth has slowed, fundamentals remain solid, and a longer-term recovery still appears likely once the political and fiscal fog lifts. For buyers and sellers alike, the advice is simple — stay informed, but don’t let speculation dictate your next move.
