Speculation over property tax changes ahead of November’s Budget has triggered a marked slowdown in the housing market, with buyer demand and sales agreed falling across the country, according to Zoopla’s latest House Price Index. The uncertainty prompted many would-be movers to adopt a “wait and see” approach, dampening activity and weighing on prices.
London and the South saw house prices fall for the first time in 18 months, a shift driven by Budget nerves and an increase in homes for sale, giving buyers more choice.
Nationally, buyer demand is down 12% year on year, with sales agreed falling 4% amid speculation over stamp duty and capital gains tax. With the Budget now delivered and the rumours settled, analysts hope these factors will no longer constrain market activity in the weeks ahead.
Industry reactions:
Tom Bill, head of UK residential research at Knight Frank: “There is more certainty after the Budget, which should allow demand to bounce back following months of speculation. However, there are still questions around the Mansion Tax. Until it is introduced in 2028, buyers and sellers face uncertainty around price thresholds and even once valuations are completed, they could be challenged, which would prolong the limbo. As the OBR has admitted, that could weigh on demand and transaction activity.
“The other risk is the precedent of a new tax. Over time, more properties will get dragged into the mansion tax net, which means the proportion of terraced houses, flats and semi-detached homes will grow, particularly in the capital. The term ‘mansion tax’ could increasingly feel like a misnomer.”
James Nightingall, founder of HomeFinder AI: “The majority of house hunters paused their search amid the Autumn Budget which resulted in fewer transactions and some sellers reducing their asking price to attract offers. First-time buyers, on the other hand, have been the one demographic that has shown a similar level of motivation seen during November last year, with many aiming to move into their new home before the end of the year.”
David Powell, CEO of Andrews estate agent: “After months of speculation, I am disappointed the government has missed this opportunity to address the challenges around stamp duty and affordability. There will be much disappointment around the £2m+ mansion tax and it’s likely the South will get hit the hardest, we will eagerly await how this impacts the market and the unintended consequences that may follow.
“I suspect house price growth in the South may remain static in the short term whilst the market adjusts to the new normal. I expect the market to bounce back from any damage caused by leaked or shelved policies leading up to the Government’s Budget and we will see activity levels increase across the South throughout 2026.”
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