"The Budget bark was worse than the Budget bite for the housing market"
- Richard Donnell - Zoopla
The uncertainty created by talk of more taxes on homes over £500,000 has resulted in a 12 per cent decline in buyer demand and fewer sales agreed in the four weeks leading up to 23rd November, compared with last year.
House prices fell -0.1% across London and the South East, and -0.2% across the South West of England.
In the wider UK housing market, average UK house prices have increased by 1.3 per cent year on year, with the average price of £270,200. Most regions and counties outside the south of England have registered above average price inflation, with home values in the North West of England 2.9 per cent higher than last year.
However, following the Autumn Budget earlier this week, the measures directly impacting the housing market proved less significant than many homeowners had feared. Crucially, any proposals for a new annual property tax on homes over £500,000 were shelved, relieving market uncertainty.
The removal of potential extra taxes is set to deliver a boost to buyer demand and overall market activity at the start of 2026. Sellers in southern England will see the greatest boost as more homes for sale are above £500,000.
Nevertheless, stamp duty remains a significant concern for many home buyers, especially in southern England. The stamp duty price thresholds for existing homeowners were set in 2014, while house prices have become 47% higher over this time. This is creating ‘fiscal drag’ for home buyers in the housing market, with buyers of average-priced homes paying more.
Since 2019, the number of homes bought by existing homeowners where the cost of stamp duty is more than 2.5% of the purchase price has jumped from 21 per cent to 33 per cent, and the cost of buying is growing for average home buyers in towns across the south of England.
"The Budget bark was worse than the Budget bite for the housing market," Richard Donnell, executive director at Zoopla, said of the report, “home buyers and sellers will welcome the end of the uncertainty that has stalled housing market activity since the late summer."
"Our data shows the underlying demand to move home remains strong. With greater certainty, we expect a rebound in housing market activity that builds into the new year, with households who paused home moving decisions over recent months returning with greater confidence."
"The removal of the threat of a new annual property tax from 210,000 homes is particularly positive for the market and will help revive activity in higher-value areas across southern England where house prices are under pressure."
David Powell, CEO of Andrews estate agent, said: "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."
James Nightingall, founder of HomeFinder AI, commented: "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."
"There is more certainty after the Budget, which should allow demand to bounce back following months of speculation," commented Tom Bill, head of UK residential research at Knight Frank, although he also noted that "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."
