Budget Anticipation Subdues Housing Market
- Asking Price Recovery: September saw a 0.7% bump in average asking prices. This is the first monthly rise since May, suggesting the summer market slowdown is beginning to find its footing.
- First-Time Buyer Scheme Debate: Following the announcement of the government's "Your first home" equity loan scheme, property experts are urging Chancellor John Healey to open the policy to the secondhand market to prevent an artificial new-build price bubble.
- The 40% Premium Trap: New data analysis reveals new-build properties now command a 40.1% premium over established homes, creating early negative equity risks for buyers using state-backed schemes.
- Hawkish Central Bank: The Bank of England held the base rate at 3.75%, but rising motor fuel costs pushed inflation to 3.1%, prompting rate-setters to openly discuss a hike to 4.0%.
- The Flat Depreciation: Flats continue to actively lose value, falling 2.27% year-on-year, as buyers prioritise freehold houses to avoid mounting leasehold and building safety compliance headaches.
- Refinancing Squeeze: Homeowners face an average £840 annual increase when refinancing, creating a highly price-sensitive market for active movers.
The UK property market is showing early signs of stabilisation following a notably subdued summer. Data from Rightmove reveals the average price of a property coming onto the market in September rose by 0.7%, or £2,441. This marks the first month-on-month increase since May and aligns with recent findings from the Royal Institution of Chartered Surveyors (RICS), which reported that their house price balance rose to a five-month high in August.
However, this recovery remains fragile. Completed sales data from Lloyds reported the first annual fall in UK house prices in nearly three years during August. Furthermore, the number of homes available to purchase has now hit a 12-year high, while buyer enquiries remain 9% lower than this time last year. Buyers are active, but with such high stock levels, they are refusing to overpay.
September's above-average price rise is a welcome sign of confidence after a particularly subdued summer, but it should be viewed as a modest recovery.
Source: Colleen Babcock, Rightmove (The Independent)
Where is the opportunity in today's market?
While the market absorbs high stock levels and stubborn borrowing costs, pragmatic participants can still find distinct tactical advantages:
- First-Time Buyers: The newly announced "Your first home" equity loan scheme will drastically lower the barrier to entry, allowing buyers with stable incomes to secure homes with just a 2.5% deposit.
- Cash Buyers & Investors: With flat values dropping and leasehold transactions stalling, cash buyers immune to strict lender stress tests hold unprecedented leverage to negotiate heavy discounts on urban apartments.
- Up-Sizers: With property listings hitting a 12-year high, buyers moving up the ladder have maximum choice and the negotiating power to demand realistic pricing from vendors eager to complete before year-end.
Sources: Rightmove and Reuters
Mortgage Rates
Refinancing remains a significant hurdle for the market. Analysis shows that UK homeowners are now paying an average of £840 a year more when refinancing their mortgages. This friction is severely compressing the onward purchasing power of existing homeowners.
[PLACEHOLDER: WE WILL INSERT THE EXCEL MORTGAGE RATE DATA TABLES HERE ONCE YOU HAVE LOADED THE FINAL MASTER SPREADSHEET]
Will mortgage rates go down in autumn 2026?
Any remaining optimism for an autumn rate cut has been thoroughly extinguished. The Bank of England held interest rates at 3.75% for a sixth consecutive meeting, but the rhetoric has shifted sharply toward future hikes. Following surges in global oil and gas prices, UK inflation jumped to 3.1% in August, reaching its highest point since March. Motor fuel alone has seen a 23% cost increase over the last year.
This pressure is compounding at the supermarket checkout. The Food and Drink Federation forecasts that food inflation will reach 4% by Christmas and peak at 6.4% in July next year, driven by the ongoing Middle East conflict and extreme weather across Europe.
The longer this volatility persists, the bigger the impact it will have on inflation and the more likely it is we will need to raise the Bank rate.
Source: Andrew Bailey, Governor of the Bank of England (The Times)
Senior Monetary Policy Committee members Clare Lombardelli and Sarah Breeden have both raised the immediate prospect of voting to push borrowing costs to 4.0%. In response, the Bank has also announced a surprise change to its bond-selling programme, planning to offload £20 billion a year to the Treasury. For homebuyers, this means securing a fixed rate now is essential risk management.
Sources: Office for National Statistics (ONS), Financial Times, and Bloomberg
Property Types: The House vs. Flat Divide
Beneath the headline averages, a two-tier property market has firmly established itself. Buyers are paying a significant premium for space and the security of a freehold, while flats are bearing the absolute brunt of the market slowdown.
Here is how the different property types performed over the 12 months leading up to June 2026:
- Semi-Detached Houses (+3.16%): Leading the market, the average semi-detached home has risen to £285,618.
- Terraced Houses (+2.76%): Driving strong demand, the average price is now £240,147.
- Detached Houses (+1.98%): The top of the market remains stable, reaching £463,547.
- Flats and Maisonettes (-2.27%): Flats are the only property type actively losing value, falling to £216,246. Over a five-year period, flats are down 1.56%.
This fall in value across the leasehold sector is mirrored exactly by the rise in headaches for owners and prospective buyers. Transactions are stalling daily due to delayed leasehold reforms and the sheer complexity of Building Safety Act compliance. Lenders are heavily scrutinising ground rent terms and insisting on strict mortgagee protection clauses. When combined with aggressive freeholder controls and escalating service charges, many flats are becoming borderline unmortgageable without significant legal remediation.
Source: SAM Conveyancing Market Analysis
First-Time Buyers & The New-Build Premium Trap
The government is preparing to announce full details of its flagship "Your first home" programme in Chancellor John Healey's Autumn Budget on 28 October 2026. The policy, championed by Prime Minister Andy Burnham, will offer first-time buyers in England a 20% government equity loan with a 2.5% deposit, specifically targeting those who cannot rely on family financial assistance.
This initiative directly addresses a growing affordability crisis. According to a recent Freedom of Information request submitted by money app Plum, the number of first-time buyers forced to borrow more than 4.5 times their income increased by two-thirds in 2025.
However, SAM Conveyancing is urging the Treasury to expand the scheme to the secondhand market to avoid repeating the failures of the previous Help to Buy programme. Official figures show that while Help to Buy supported 328,000 first-time buyers between 2013 and 2023, it funnelled 11% of the entry-level market into a captive environment that inflated new-build prices by 70.1%.
Today, buyers face an immense financial penalty for purchasing new stock. HM Land Registry figures reveal that new-builds now command a 40.1% premium over established properties, averaging £396,889 compared to £283,194 for an existing home.
Help to Buy was presented as a cure for Britain's housing crisis, but the data proves it functioned primarily as a price-support mechanism for volume housebuilders. Restricting the incoming 'Your first home' scheme solely to new developments will simply pump billions in state support into developer balance sheets, leaving buyers to absorb an immediate 40% price premium alongside unresolved leasehold costs and tight 28-day exchange ultimatums.
CEO of SAM Conveyancing
By opening the 20% equity loan to established freehold houses and existing flats, SAM Conveyancing argues the government could unfreeze the second-stepper chain. This would allow first-time buyers to purchase existing homes and free current owners to step up to larger properties. To safeguard taxpayers and prevent sellers from artificially inflating prices, equity loans on secondhand homes should be strictly pegged to an independent valuation from a RICS-regulated surveyor at the point of purchase.
New Build Delivery & Planning Reforms
The call to expand equity loans to existing housing stock comes as the government falls severely behind on its construction targets. Analysis of official housebuilding statistics indicates that the government's pledge to build 1.5 million homes over five years is severely off track.
Since July 2024, exactly 250,520 new dwellings have been completed across seven quarters of published data. This leaves the current administration running at an estimated annual rate of just 143,154 homes, less than half of the 300,000 annual completions required to meet its manifesto commitment.
In an effort to stimulate residential construction and overcome bureaucratic delays, developers will now be able to pay a one-off nature recovery charge of £2,000 per property to receive fast-track planning approval. The industry hopes this will ease the supply bottlenecks that have continually suppressed new build completion figures, though experts warn that financial levies alone cannot replace fundamental market liquidity.
Sources: MHCLG Live Tables on House Building, Financial Times, and SAM Conveyancing Research
Will mortgage rates go down again in 2025?
The short answer is: It is possible, but not guaranteed, and any fall will be slow. The Bank of England's decision to hold the base rate at 4.0% in September, following the August cut, signals a period of caution.
Inflation, at 3.8% in August, is still too high, forcing the Monetary Policy Committee (MPC) to prioritise price stability over supporting the economy with lower rates.
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 held steady or slightly increased in September. We are seeing rates settle into the mid-4% range (e.g., average 5-year fixed deals around 4.5% to 4.6%) . The consensus is for at most one more 0.25% cut before the year ends, potentially in November or December, to bring the Base Rate to 3.75%.
The Base Rate is lower than its 5.25% peak, which is easing affordability pressure. However, low-rate fixed deals from years ago are being replaced with higher rates.
This means securing a new deal early is key to avoiding the high Standard Variable Rate (SVR), which remains at about 7.4% across many lenders.
The upcoming MPC announcements on Bank Rates are on the 6th November and 18th December, and in 2026, 5th February, 18th June, 30th July, 17th September, and 5th November.
Property price stability masks an overall drop in sales
England & Wales
The average house price in England & Wales is holding firm at £286,358 (July 2025). This pause follows a period of strong Spring price growth; the annual price movement stands at 3.0% compared to July 2024 data.
This flat price movement suggests the market has found its new level after an earlier surge. The growth remains positive, but prices are stabilising rather than accelerating.
On the transactional front, the April dip was clearly temporary. Completed sales volumes for May 2025 rose to 34,523 transactions. This is a 63% jump from the 21,176 sales recorded in April. However, it's important to note that year-on-year, we experienced a 45% dip.
This massive rebound confirms that the April volume was exceptionally low because buyers pushed completions into March to beat the SDLT deadline. The May figures indicate a return to a more stable, albeit subdued, level of market activity.
For different buyer groups, prices are up across the board, though growth rates vary:
- The average price for first-time buyers is £240,497, a 3% annual rise.
- Owner-occupiers paid an average of £347,320 (up 2.4% year-on-year).
- Cash buyers averaged £273,054 (up 2.3% year-on-year).
First-time buyer price growth (3%) continues to slightly outpace the market average, pointing to persistent demand in the lower price brackets despite the SDLT relief threshold changes, which have increased costs for many new entrants.
London
The capital continues its trend of moderate growth. The average property price in London reached £561,587 in July 2025. This marks a 0.7% year-on-year increase, highlighting a much slower growth trajectory than the 3.0% seen across England and Wales.
This slower growth is typical of the capital's high-value market during periods of high interest rates, as buyers are more sensitive to rising mortgage costs and affordability is stretched.
London's transaction volumes saw a much sharper rebound than the rest of the country. Completed sales in May 2025 rose to 3,002, an 86.8% jump from the post-SDLT trough of 1,607 in April.
This volatile movement confirms that London experienced a more extreme rush to complete before the Stamp Duty changes took effect.
Londoners are choosing to remain living in London
Hamptons Estate Agents are reporting 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.
Mortgage approval reports
Home buyers
House Purchase Mortgage Approvals in August 2025 reached 64,680. This represents stability, marking a small 0.47% decrease year-on-year and a slight 0.74% dip from the high transactional figures recorded in July 2025.
This stability suggests that the August base rate cut is not driving an immediate rush of new buyers, but rather supporting the existing demand levels.
The market remains competitive, with the trend indicating that buyers are keen to transact as long as rates remain stable or trend downwards.
Remortgages
Remortgage Approvals reached 37,891 in August 2025. While this figure is a 2.24% decrease from July 2025, it signifies a massive 36.44% increase compared to August 2024.
The monthly dip is expected, following the strong push in July as homeowners sought to secure new deals ahead of the anticipated August base rate cut.
The substantial annual increase confirms the strong, underlying demand in the remortgage market. With large numbers of fixed-rate deals still set to expire throughout 2025, remortgaging activity is likely to remain high, particularly as five-year fixed mortgage rates continue to fall below the five per cent mark.
Housing Secretary pushes 'Build, Baby, Build'
Steve Reed, the Housing Secretary, used his conference speech to push for a significant acceleration of housebuilding, pledging that work on three new towns will start before the next general election.
The government plans for 12 new towns across England in total, with three priority locations identified to accelerate the delivery of Labour's 1.5 million homes target.
These three priority sites for construction are:
- Tempsford, a village in Bedfordshire.
- Crews Hill, on the outskirts of North London.
- South Bank, in a suburb of Leeds.
The overall goal of the new towns programme is to build cutting-edge communities, with each new town expected to contain at least 10,000 homes.
“This party built new towns after the war to meet our promise of homes fit for heroes... we will once again build cutting-edge communities to provide homes fit for families of all shapes and sizes.”
Sources: Steve Reed, Housing Secretary | The Guardian
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.
This is a strong 15% year-on-year increase and a 6% rise on the previous quarter, suggesting renewed confidence in the development pipeline.
However, actual delivery is still constrained. Total completions in Q2 2025 registered 36,160 units. Notably, this represents a 19% decline year-over-year compared to the high completion rate observed in Q2 2024, confirming that the delivery bottleneck persists.
While the volume of homes being started is recovering, high material costs, labour shortages, and planning delays mean completions cannot keep pace. This supply constraint remains a core problem for the market, supporting existing property prices due to the restricted supply of new homes.
What could help bridge the gap are the brownfield sites in England. The countryside charity CPRE has reported that almost 1.5 million new homes could be built on brownfield sites. This would then avoid encroaching on the green belt. This would offer a great opportunity for developers and planning departments.
Labour is expected to fall short of its 1.5 million homes target, with projections estimating 840,000 homes will be delivered over five years
Source: Savills
Andrew Boast FMAAT
CEO of SAM Conveyancing
The Housing Market has enjoyed a buoyant summer with home buyers and sellers coming back to the market for the first time in years. Sadly, October is overshadowed by a budget that threatens significant tax changes.
While some of the tax changes might boost the housing market, some'll prefer to sit and wait to see what the facts are when we hear the Budget on the 26th November.
It can't be worse than the Liz Truss fiasco...can it?
Sources: Latest data from - Gov.UK, Bank of England, UK House Price Index, ONS and Propertymark (NAEA).
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