Christmas lull hits early as house prices drop amid budget uncertainty

With buyer attention unusually scattered, sellers are reducing asking prices more sharply than normal to attract bargain-hunting buyers, according to the latest Rightmove House Price Index.

Data for November shows that average new seller asking prices fell by 1.8% (£6,591) to £364,833, compared with the ten-year November average decline of 1.1%. This represents the largest price drop at this time of year since 2012.

The high number of homes on the market continues to apply downward pressure on prices, while uncertainty around the upcoming Budget is affecting buyers’ confidence and housing affordability. These factors are combining with the usual seasonal slowdown, causing the Christmas lull to arrive earlier than usual.

Sellers who are already on the market are responding by adjusting their prices more aggressively in an effort to stand out to buyers.

More than a third (34%) of homes on the market have had their asking prices reduced, with the average reduction reaching 7%—both figures the highest since February 2024. The market remains cautious, with speculation around the upcoming Budget, particularly regarding new property taxes at the upper end, fuelling uncertainty among sellers and buyers alike.

Rightmove’s Colleen Babcock said: “The decade-high number of homes available on the market continues to restrict price growth, with many new sellers keen to avoid standing out by over-pricing compared with their competition. The Budget is a big distraction, and is later in the year than usual, with many would-be buyers waiting to see how their finances will be impacted.

“It appears that the usual lull we’d see around Christmas time has arrived early this year, and sellers who are keen to move are having to work especially hard to entice buyers with competitive pricing. This means that average new seller asking prices are now 0.5%, or £1,759 cheaper than a year ago.

“In addition, a third of homes already on the market for sale have had their asking price reduced, with an average reduction of 7%, further illustrating that this is a buyers’ market.”

The number of sales agreed for homes priced over £2m, which would be subject to the rumoured mansion tax, is down by 13% compared to the same period last year. Growing speculation that the government will look to increase taxes on these properties, accounting for around 1% of the market, has led to some buyers in this price band waiting to see what the Budget brings. The number of new sellers coming to market in this price bracket is also down by 9%, a larger drop than in lower-priced market sectors.

It’s a similar story for homes priced between £500,000 and £2m, which would be impacted by rumoured stamp duty changes in England, and some also by capital gains tax on homes sold for over £1.5m. Sales agreed in this price range are down by 8% year-on-year, a smaller drop than the £2m+ sector, but a larger decline than the overall average this month of a 5% year-on-year fall in agreed sales.

Meanwhile, homes priced under £500,000, accounting for approximately 75% of the market, have proved more resilient, with movers more likely to be carrying on as normal. The number of sales agreed in this sector is down by only 4% compared to this time last year.

While homes in this price bracket haven’t yet been the focus of any specific property tax rumours, the upcoming Budget is likely still causing some general jitters around how personal finances and affordability will be affected.

It’s also important to note that this data for the full month of October is comparing with a strong month last year where sales activity was ramping up, particularly in the south of England, in anticipation of the stamp duty increases in England from April 2025. This is contributing to the downward year-on-year activity trends, but across the whole year to date the overall number of sales being agreed is still up by 4% on the same period in 2024.

As well as the forthcoming Budget, many would-be home-movers will have their eyes on the mortgage rate trend and how their affordability is affected. The average two-year fixed mortgage rate is currently 4.41%, which while down from 5.06% at this time last year, has been slower to fall during 2025 than many predicted. Though the decision to hold the Bank Rate in November rather than cut it will be disappointing to movers, there is still a good chance of a rate cut in December, which would be a welcome early Christmas present for movers.

Babcock added: “Rumours of the contents of the forthcoming Budget are affecting the market, as we’re seeing a greater hesitation in sales activity, especially at the upper end, which has been the focus of most of the discussion. While there is also a general unease at how the Budget may impact personal finances, the majority of home moves would be unaffected by the rumoured changes to property taxes.

“Falling mortgage rates and rising wages have boosted buyer affordability, but the market also needs further Bank Rate cut and less uncertainty about taxes. If we can see some mortgage rate reductions over the next few weeks, supported by a December Bank Rate cut, we could start 2026 on a positive note with the end of the prolonged Budget hiatus lifting the gloomy atmosphere of recent weeks.”