Autumn Budget tax fears hit buyer demand

A property portal has warned that Autumn Budget tax speculation is dampening buyer demand, with many adopting a “wait and see” approach ahead of the November budget.

 Zoopla’s house price index shows that demand for properties over £500,000 has fallen by 4%, while new listings for these homes have dropped 7% over the past five weeks.

House price growth has continued to slow, down from 1.9% in December 2024 to 1.4% in August.

Speculation over potential property tax changes

According to Zoopla, the average estate agent now has 36 homes for sale, a 20% increase from 2023 and an 8% rise year-on-year. The number of sales agreed continues to grow, up 3% year-on-year, as buyers look to capitalise on the autumn market.

However, this recovery faces headwinds from speculation over potential property tax changes in the Autumn Budget.

The house price index shows that both buyer demand and new listings have declined for homes priced above £500,000. In the past five weeks, properties in this range have seen a 4% drop in buyer demand and a 7% reduction in new listings.

For homes over £1 million, demand has fallen by 11%, while new listings are down 9%. This contrasts sharply with the rest of the market, where demand and supply remain stable.

With one in three homes for sale priced above £500,000, and 8% over £1 million, the impact of this speculation is most pronounced in high-value markets such as London and the South East.

Creating a holding pattern for higher net worth buyers and sellers

Zoopla says while the wider, mainstream market remains resilient, the looming November Budget and the potential for new policies are creating a holding pattern for higher net worth buyers and sellers.

Richard Donnell, executive director at Zoopla, said: “The housing market has experienced a sustained increase in market activity over the last 18 months as mortgage rates have stabilised. The market is on track for the most sales since 2022, but without rapid house price inflation.

“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. The wider market remains largely unaffected.

“Serious buyers should think twice before delaying, as while the Budget is two months away, it takes, on average, six to seven months to find a property and complete a sale.”

House price growth has continued to slow over the last few months

The house price index also reveals house price growth has continued to slow over the last few months, down from 1.9% in December 2024 to 1.4% in August this year. The average UK home is now worth £271,000, an increase of £4,350 over the last year.

In London, the South East, South West, and Eastern England, higher stamp duty costs and affordability constraints are putting a damper on price growth, with these regions having seen the lowest growth in the country of less than 0.5%.

However, these issues are less of a problem for buyers in other parts of the UK, helping to maintain stronger growth. Northern Ireland is leading the way with a significant 7.9% increase and the North West is seeing a solid rise of 3.1%.

House prices are rising fastest, up 2.8%, in markets where average prices are below £200,000, including Kirkcaldy, Motherwell, and Tweeddale in Scotland, Oldham in the North West, and Llandrindod Wells in Wales. In contrast, local markets with average house prices above £500,000 are seeing little to no movement.