The Autumn Budget 2025 left the Housing Market Alone
- House prices across England & Wales fell MoM to £287,701, but are still higher by 2% YOY.
- The budget left the housing market relatively unchanged.
- Over-inflated budget anticipation meant asking prices fell ahead of the budget.
- Affordability for first-time buyers is the best in a decade, with the average first property now costing less than 6 times the average salary.
- I predict the base rate will fall to 3.75% on the 18th of December.
After so much media hype, the Autumn budget didn't deliver any real changes for the housing market. It raises the question: Should there be so much attention to the budget if it is going to cause so much market disruption, over relatively little meaningful change?
Housing Market Changes in Autumn Budget
- Mansion Tax. A High Value Property Council Tax Surcharge will apply to properties valued at over £2 million (based on 2026 valuations). This is in addition to the existing Council Tax bill and is scheduled to take effect in April 2028.
- Rental Income Tax for Landlords. As of April 2027, the income tax rate for rental income will increase by two percentage points. This means the rates will be: Basic 22%; Higher 42%; and Additional 47%.
- Housing Supply and Planning Reforms. The government aims to deliver an additional 170,000 homes by 2029–30, partly by reforming the National Planning Policy Framework (NPPF). They are also looking to boost the capacity of planning authorities, including funding to recruit an additional 350 planners across England. This aims to eliminate bottlenecks and expedite decision-making for housing and infrastructure projects.
In summary, the key focus of the Autumn Budget was on increasing the tax burden on high-value properties and private landlords, while avoiding broad-based tax changes (such as SDLT) and making targeted investments in planning to boost housing supply. The Housing Market would have been a better place had there not been so much noise around Stamp Duty and Capital Gains Tax changes that never happened; sometimes it is best left alone.
Asking prices fell ahead of the budget
Rightmove reported that the average asking price for homes put on the market fell in November by the largest amount since 2012, as the housing market slowed ahead of the budget. Asking prices by new sellers fell by 1.8 per cent this month, making the average price of a home in the UK £364,833.
Whilst it is common for house prices to drop in November, 34% of homes on the market reduced their asking prices this month and implemented an average price cut of 7%. If the hype around the budget hadn't been overinflated, then it is likely the market wouldn't have reacted as dramatically.
Surveyors told RICS that the drop in activity was primarily due to concerns over the upcoming November Budget, leading to caution among buyers and sellers, with affordability and sentiment acting as key constraints.
Rightmove, reported a 5% fall in buyer and seller activity in September, supporting RICS' statements. This has again been linked to the fears of property tax rises in the Budget.
Speculation that the budget may increase the cost of buying or owning a property at the higher end of the market, has given some movers, particularly in the south of England, a reason to wait and see what’s announced in the budget
Source: Colleen Babcock, Property Expert, Rightmove
House prices across England & Wales are 1% below their record high
The average price of a property in England and Wales reached a record £290,064; 3% up YOY in August. Despite a natural 1% MoM fall in September, in line with seasonal trends, property prices are still 2% up on the same month last year. With inflation over 2%, however, this equates to a real-terms fall, albeit minor.
The Bank of England also report that mortgage approvals in September were the highest since 2024. We'll see things cooling off less than usual through November and December, with nervous buyers willing to proceed now that the Autumn Budget is out of the way.
I expect the new year to be full steam ahead as new homeowners rush to buy before the forecasted 4% growth in 2026 (Savills) outprices them again, with the greatest pressure on more affordable property.
“Now the budget cards are on the table, it’s a green light for buyers and sellers to waste no time to get a move underway. Mortgage lending has continued throughout the pre-budget blues and affordability has improved as wages have risen, loan to income ratios have increased and interest rates have fallen… There’s a very good chance that the bank will cut the base rate in December which will be the best news for mortgage borrowers across the board.”
Source: Enzo Mora, CEO and founder of The Mortgage Brain
Affordability for first-time buyers is the best in a decade
After we reported in our October Report that first-time buyers were giving up hope, Lloyds Banking Group are reporting it is the most affordable time to buy. A combination of lower interest rates, higher incomes and muted house price growth has improved affordability for first-time buyers over the last year.
Data from Lloyds Banking Group shows the price of a typical first-time buyer home is 5.9 times the average first-time buyer salary, down from 6.2 times at the end of 2024. The last time the property price-to-income ratio for first-time buyers sat below 6 was at the end of 2015.
Will mortgage rates go down again in 2025?
I believe a base rate drop on the 18th of December is now likely. The base rate has been cautiously held at 4% since the August cut, and the Autumn Budget has now provided some clarity. Despite inflation remaining above target, it fell to 3.6% in October, and it is now time for the Monetary Policy Committee (MPC) to support homebuyers and the economy with a lower rate.
Fixed mortgage rates are guided by the swap market, which anticipated the August cut but is now less certain about further drops. As a result, average fixed rates have only slightly decreased in November. We are seeing rates settle into the mid-4% range (e.g., average 5-year fixed deals around 4.4%, down from 4.5% to 4.6%) . The consensus is for one more 0.25% cut before the year ends, to bring the Base Rate to 3.75%.
Lower fixed-rate deals from years ago (before the 5.25% peak) are expiring. This means securing a new deal early is key to avoiding the high Standard Variable Rate (SVR), which remains at about 7.5% across all lenders.
I think the MPC will reduce the BOE base rate to 3.75% at their next meeting. I think the lack of budget involvement in the housing market and inflation stability is likely to give confidence for this change.
The upcoming MPC announcements on Bank Rates are on the 18th December, 5th February, 18th June, 30th July, 17th September, and 5th November.
Property sales volume is still catching up after April
England & Wales
The bottleneck caused by the increase in SDLT in April brought a huge number of property sales forward into March, and slashed sales volume by 55% YoY in April. Throughout the year, the shortfall has been decreasing, and the gap has shrunk from a half to a third (34% in July).
This steady recovery toward 'normal' sales has been progressing despite market uncertainty around the Autumn Budget. Now that it's behind us, I expect we'll see a return to healthy movement by the new year.
Despite the subdued market, property prices in England & Wales set a record high of £290,064 in August 2025. This 2.85% annual increase demonstrated the market's capacity to absorb volatility, and the slight seasonal fall MoM to September shouldn't dampen this, as house prices remain stronger YoY.
The key driver is the sustained demand from the entry-level sector, with first-time buyers showing the greatest annual growth amongst all cohorts.
- The average price for first-time buyers is now £241,344, a 2.3% annual rise.
- Owner-occupiers paid an average of £349,406 (up 1.7% year-on-year).
- Cash buyers averaged £274,250 (up 1.4% year-on-year).
London
London continues to face challenges. The average property price is now £556,454 (September 2025), representing a 2% decrease both MoM and YoY, following August's 0% growth.
This muted price movement is paired with a drop in transactions. Completed sales in London for June 2025 were 4,429, marking a steep 43% dip from July 2024's volume of 7,834. However, as in the rest of the country, the gap continues to recover since April's 68% drop.
This combination of slightly falling prices and a near-halving of transactions confirms London's high-value market is particularly vulnerable to economic and policy uncertainty.
Has the budget killed the London Housing Market?
In our September Review, Hamptons Estate Agents reported that the number of Londoners moving out of the capital has fallen to its lowest in more than a decade, now that people are having to go back into the office more often. They are now reporting that the budget will cause the London market to flatline.
Hamptons is predicting the capital’s average property price will rise by only 0.5% by 2028 and will be particularly hampered by the market for properties of £2 million and above, where values are set to drop by 5% after the Mansion Tax announcement.
It’s hard to ignore the growing drag of taxation and politics. London, which historically leads recoveries, is being held back by higher stamp duty and broader tax anxieties, locking some owners into their homes and others out of buying them.
Source: Aneisha Beveridge, head of research at Hamptons
I think the mansion tax may actually stimulate the top-end market in London to consider downsizing earlier, allowing second-home buyers to enter the market. The housing market needs movement, instead of homeowners remaining put.
Mortgage approval reports
Home buyers
House Purchase Mortgage Approvals in October 2025 reached 65,018. This represents a 1% decline from the previous month and a 4% decrease from last year. The hype around the budget slowed the housing market, and with the next base rate review just around the corner, buyers will most likely wait in hope of cheaper mortgage rates.
Remortgages
Remortgage Approvals reached 33,053 in October 2025. This represents an 11% decline from the previous month; those looking to remortgage followed suit with homebuyers. Why risk remortgaging when the base rate could come down?
I expect to see homeowners to look for cheap mortgage rates in the run up to the year end as it is common for the remortgage market to ramin active right up to Christmas.
How many new-build properties are being built?
The latest figures for new home construction show a mixed picture across England and Wales. House builders have increased their commitment, with total starts for new homes reaching 31,430 in Q2 2025. New data has not yet been released for the 3rd Quarter (July to Sept 2025)
Andrew Boast FMAAT
CEO of SAM Conveyancing
With the budget's lack of involvement in the Housing Market, I feel it is likely that the base rate will fall to 3.75% in the December meeting.
The platform is set for 2026 to start stronger with lower asking prices and more affordable mortgage rates.
The Budget's pledges for house building stimulation need to impact growth for next year, or else we will be left with the same old same old problem of not enough housing stock.
Sources: Latest data from - Gov.UK, Bank of England, UK House Price Index, ONS and Propertymark (NAEA).
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