Speculation about sweeping property tax reforms in the Chancellor’s upcoming Budget is casting a shadow over Britain’s housing market, with Zoopla warning that demand at the top end has slowed as buyers and sellers adopt a “wait-and-see” approach.
According to Zoopla, demand for homes priced above £500,000 is down 4% year-on-year, while interest in £1 million-plus properties has fallen by 11% over the past five weeks. Sellers are holding back too, with 9% fewer £1m+ homes and 7% fewer £500k+ homes listed compared with last year.
Richard Donnell, executive director at Zoopla, said even the hint of reform has been enough to dampen activity: “Pre-budget speculation over possible tax change is a regular occurrence, but this summer it has been bigger than usual, which has led some buyers and sellers to delay home-moving decisions for homes priced over £500,000.”
Reports have suggested that stamp duty could be scrapped altogether and replaced with an annual levy on properties worth more than £500,000.
While no firm details have been released, the speculation has been enough to unsettle sentiment — particularly in London and the South East, where higher-value homes dominate the market.
Zoopla estimates that about one-third of all homes for sale are priced over £500,000, with 8% worth more than £1m.
Kevin Shaw, national sales managing director at Leaders Romans Group, said the talk of a so-called “mansion tax” was creating hesitation at the upper end of the market.
A survey by Savills reinforced the trend, showing sentiment in the “prime” market had fallen to a five-year low, with homes priced at £10m and above experiencing the sharpest downward pressure.
Lucian Cook, Savills’ head of residential research, noted: “Buyers and sellers have been left trying to make sense of what different measures might mean for them without any guarantee of what is going to prevail.”
The national picture shows house prices up just 1.4% year-on-year to £271,000 — the lowest growth rate since September 2023.
• London & South: Prices rose less than 0.5%, with “prime” central London homes falling 1.8% over the summer and 4.7% year-on-year.
• Scotland & North West: Prices rose 2.8% and 3.1% respectively.
• Northern Ireland: The property hotspot, with annual growth of 7.9%.
Despite the tax jitters, Zoopla expects sales volumes to rise to 1.15m in 2025, up from 1.1m in 2024, thanks to greater stability in mortgage rates. The group forecasts 1.5%–2% price growth next year.
Donnell added that while the wider housing market remains resilient, tax uncertainty will weigh more heavily on areas with high concentrations of expensive homes in the coming weeks.
