Residential property price growth continues to slow, falling from 1.9% in December 2024 to 1.4% in August, according to the latest data from Zoopla.
Speculation around potential tax changes in the upcoming Budget is weighing on market activity. Demand for properties priced above £500,000 has fallen by 4%, while new listings in this price bracket have declined by 7% over the past five weeks. The impact is even more pronounced in the £1 million-plus segment.
Meanwhile, house prices are rising fastest in the most affordable markets. Areas where average prices are below £200,000 have seen annual growth of 2.8%, while prices in markets above £500,000 have remained broadly flat.
Home sales set to hit three-year high, but price growth continues to slow – Property Industry Eye
Industry reactions:
Kevin Shaw, national sales managing director at LRG: “The housing market has shifted in favour of buyers, with sellers increasingly willing to align with agents’ valuations and to negotiate on price. That balance is welcome for many purchasers, particularly first time buyers who appear undeterred by April’s increase in Stamp Duty and have benefitted from lower interest rates.
“At the upper end of the market, speculation over property tax has created hesitation. The prospect of a so-called mansion tax, combined with wider fiscal uncertainty, has dented sentiment and slowed decision-making somewhat.
“Other aspects of Zoopla’s research reflect the broader political and economic picture – specifically the reversal of pandemic-driven coastal demand, together with an increase in council tax on second homes in the South West, and a reduction in the number of non-doms impacting demand for second homes in central London.
“Yet price growth in more affordable regions – to which we would add the East Midlands and parts of the North West – demonstrates that much of the market remains buoyant. While tax speculation may leave 2025 relatively flat overall, the fundamentals are stable. A stronger spring market should emerge once fiscal policy is clarified and confidence returns.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman: “Yet another housing market survey hot-on-the-heels of others recently confirming property prices are softening.
“In our offices, we’re hearing time and again how concerns about possible tax increases in the Budget – particularly for high-end homes – are prompting buyers and sellers to ‘sit on their hands’, though our existing sales are certainly not collapsing.
“Demand remains relatively healthy for more affordable homes but is slowing in parts of the market which were already under performing.”
Tom Bill, head of UK residential research at Knight Frank: “A combination of high supply and a creeping sense of uncertainty as the Budget approaches means the pressure on prices is downwards at the moment. Mortgage rates have been stable, which has supported demand, but we would expect a re-run of the hesitancy we saw last year as 26 November approaches and have recently downgraded our 2025 UK forecast to 1% from 3.5%.
“Supply is high as a growing number of landlords sell due to the tougher legislative environment in the lettings sector, sales that were delayed because of the general election in 2024, more financial distress in the system as rates normalise and an overhang of stock from April’s stamp duty cliff edge. It will mean sellers need to be particularly realistic with their asking price just to get buyers through the door for a viewing.”
Nathan Emerson, CEO of Propertymark: “A slowing in house price growth will be welcome news for those serious about moving home, especially first-time buyers. However, there are underlying factors affecting affordability and confidence, such as economic uncertainty and inflation, making people cautious about their finances, and stagnating income and wage growth. Recent changes to Stamp Duty across England and Northern Ireland have also reduced buyer affordability, and rumours of further alterations are bound to create some uncertainty.
“For some, however, especially current homeowners, a slow tapering in interest rates has allowed lenders to introduce more competitive mortgage products and has decreased the monthly cost for those with variable or tracker mortgages, allowing them to refinance to lower rates. We now look to the Bank of England’s next interest rate announcement in November and hope to see positive introductions through the UK Government’s Budget that will help ease affordability pressures for buyers looking to step onto or move up and down the housing ladder.”
Matthew Thompson, head of sales at Chestertons: “In August, buyers used the holidays to review their finances, refine their search criteria and to view homes they already shortlisted. The number of properties coming onto the market has decreased, however. Whilst there was a substantial increase in landlords selling up amid the Renters’ Rights Bill earlier this year, it was a momentary uplift that has now rebalanced. As a result, buyers will find it more challenging to secure a property within their budget and are advised to start their property search as early as possible.”
Home sales set to hit three-year high, but price growth continues to slow
Read the orginal article: https://propertyindustryeye.com/property-industry-reacts-to-zoopla-house-price-index-18/
