UK homebuyers have returned to the market in large numbers over the past two years, driving a steady recovery in housing sales. However, according to Zoopla’s latest House Price Index, recent speculation about potential tax changes ahead of the November Budget is beginning to weigh on activity, particularly in the higher end of the market.
Buyer demand for homes priced over £500,000 has dropped by 4% year-on-year, while new listings in this price bracket have declined by 7%, as more buyers adopt a ‘wait and see’ approach amid pre-Budget uncertainty.
At the national level, house price growth has continued to decelerate in recent months, easing from 1.9% in December 2024 to 1.4% in August 2025. The average UK home now stands at £271,000—an annual increase of £4,350.
Regionally, affordability pressures and higher stamp duty costs are having the greatest impact in London, the South East, South West, and East of England, where annual price growth has slowed to below 0.5%—the lowest in the UK. In contrast, more affordable regions continue to see stronger momentum. Northern Ireland leads the way with a 7.9% annual increase, while the North West is also outperforming with growth of 3.1%.
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. Additionally, the number of sales agreed continues to rise, up 3% year-on-year, as buyers look to capitalise on the autumn market. However, this recovery is facing headwinds from recent speculation over potential property tax changes.
Table 1: Tax speculation hits demand and new listings for a third of the market
Zoopla analysis reveals that buyer demand and new listings have both declined for homes priced above £500,000. Properties priced over £500,000 have seen a 4% drop in buyer demand and a 7% reduction in new listings over the last five weeks. Similarly, demand for homes over £1m has fallen by 11%, while new listings are down by 9%. This is in sharp contrast to the rest of the market, where demand and supply remain stable.
With one in three homes currently for sale priced above £500,000, and 8% over £1m, the impact of this speculation is most pronounced in high-value markets like London and the South East. 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.
Average mortgage rates for a new five-year fixed-rate deal are currently between 4% and 5%, and homebuyers can now afford to borrow 20% more than they could six months ago for the same income. These adjustments have been a key driver of housing demand in recent months, particularly among first-time buyers and those in more affordable regions.
House prices are rising fastest (2.8%) in markets where average prices are below £200,000. In contrast, local markets with average house prices above £500,000 are experiencing static prices.
Table 2: House prices rising faster in lower value markets
Outside of Northern Ireland, house prices are rising by over four per cent in five postal areas including Kirkcaldy (KY) to the north east of Edinburgh, Oldham (OL) in North West England, Tweeddale (TD) covering the eastern side of the Scottish Borders, Motherwell (ML) to the south of Glasgow and Llandrindod Wells (LD)in Wales, north of Cardiff.
Property prices continue to register annual falls of one per cent across southern England led by second home hotspots like Bournemouth (BH), Truro (TR), Exeter (EX) and Torquay (TQ) alongside parts of central London (WC and EC). Council tax changes for second homeowners are seeing more homes listed for sale in areas that have a high concentration of second homes which is impacting house price inflation.
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”.
Read the orginal article: https://propertyindustryeye.com/home-sales-set-to-hit-three-year-high-but-price-growth-continues-to-slow/
