Budget Anticipation Subdues Housing Market
- UK house prices rise more than expected in September
- Homebuyers pay a premium for houses near stations
- Autumn Budget 2025: What will impact you?
- Low deposit mortgages reached a 17-year high
- Londoners are choosing to remain living in London
- Housing Secretary pushes 'Build, Baby, Build'
The September Housing Market benefited from the Base Rate remaining at 4%, however, as we enter October, we will see the effects of the uncertainty around the Autumn Budget. The budget has been announced for the 26th November, and already, we're seeing hesitation in October.
According to Zoopla, the speculation over possible changes to stamp duty and council tax has begun to weigh on activity, with the slowdown mostly felt in the more expensive parts of the market. This has prompted would-be buyers to put their moving plans on hold, especially at the top end of the market.
We all remember the Liz Truss fiasco of October 2022, when the base rate went up to 5.25% and left the housing market and home owners financially struggling. A budget can have both a positive and a negative impact on the market; however, I think this one will likely be a beneficial one. Some of the changes would make buying a home more affordable, such as scrapping stamp duty on properties up to £500k. We'd see more first-time buyers in London and more costly areas to buy in, plus the opportunity for second-home movers to upsize. The impact of this was seen during COVID where sales volumes reached a maximum of 169,769 sales in June 2021.
UK house prices rise more than expected in September
The UK property market picked up in September after a quiet summer, with house prices rising by 0.5 per cent compared to August, according to Nationwide Building Society. The average home price increased to £271,995, recovering from a small dip the previous month, while annual house price growth edged up from 2.1 per cent to 2.2 per cent.
The figures were stronger than the 0.2 per cent month-on-month expansion forecast by economists polled by Reuters and the 1.8 per cent annual growth they expected. I anticipate that, as we enter a slower period due to the budget, homebuyers who place offers will do so at or below the asking price.
...despite ongoing uncertainties in the global economy, underlying conditions for potential homebuyers in the UK remain supportive
Source: Robert Gardner, Chief Economist at Nationwide Building Society
Homebuyers pay a premium for houses near stations
Nationwide Building Society reported that homebuyers in London pay an average premium of £42,700 for properties located within 500 metres of a tube or railway station, compared to similar homes 1,500 metres away. The data shows that, while the housing market was impacted by increasing home working patterns following the pandemic, transport links still hold a high level of importance for homebuyers. The data could also suggest that people are now going into the office more frequently.
Autumn Budget 2025: What will impact you?
Tax Focus | Summary | Status | Effect |
|---|---|---|---|
Tax Focus Capital Gains Tax (CGT) on Main Residence | Summary of Change/Proposal Restriction or removal of Private Residence Relief (PRR) for high-value properties. | Factual Status SPECULATION. Current law is 100% exempt. No confirmed change. | Effect Could freeze the high-end property market and significantly increase the tax bill for long-term homeowners. |
Tax Focus National Insurance (NICs) on Rental Income | Summary of Change/Proposal Proposal to apply NICs (e.g., 8%) to a landlord's rental profits. | Factual Status PROPOSAL. Current law has no NICs on rental income. No confirmed change. | Effect Increases the tax burden on landlords. Likely leads to higher rents and a reduction in the supply of rental properties. |
Tax Focus Inheritance Tax (IHT) on Pensions | Summary of Change/Proposal Bringing most unused pension funds and death benefits into the scope of IHT. | Factual Status CONFIRMED LAW. Takes effect from 6th April 2027. | Effect Increases IHT liability for some estates. Forces re-evaluation of pension savings as a wealth transfer tool. |
Tax Focus Stamp Duty Land Tax (SDLT) Overhaul | Summary of Change/Proposal Replacing SDLT for owner-occupiers with a new tax, paid by the seller, based on the property's value. | Factual Status PROPOSAL/SPECULATION. No confirmed policy. Reports suggest a focus on homes over £500,000. | Effect Moves the tax burden from buyer to seller. Could boost transaction volume by lowering the upfront cost for buyers, particularly first-time buyers and those downsizing. |
Tax Focus Council Tax Reform | Summary of Change/Proposal Overhauling the current system, possibly replacing it with a local Annual Property Wealth Tax (based on current values, not 1991 values). | Factual Status PROPOSAL/SPECULATION. Various academic proposals exist. Council Tax is politically challenging to reform. | Effect Would heavily increase local tax bills for owners of higher-value homes (Bands G and H), while potentially lowering bills for lower-value homes. Could protect cash-poor, asset-rich pensioners via a deferral scheme. |
Tax Focus Autumn Budget 2025 Date | Summary of Change/Proposal Date of the next major fiscal event where tax changes are expected to be confirmed or announced. | Factual Status CONFIRMED DATE. Chancellor Rachel Reeves will deliver the budget on 26th November 2025. | Effect This is the official deadline for clarity on the above proposals and any other changes to property and wealth taxation. |
Low-deposit mortgages reached a 17-year high
Money Facts reported that the number of low deposit mortgages on the market – requiring deposits of five or 10 per cent – reached a 17-year high in September. There were 1,360 mortgage products requiring deposits of 5% or 10% in September – marking the highest total since 1,532 options in March 2008 (mid-financial crash).
For most first-time buyers, a low deposit is the only way to get onto the housing ladder and with certain mortgage products, the Government protects the lender in the event of the property being repossessed. The risk for the lender is that with only a low deposit, the costs for repossession and the potential fast sale undervalued at auction, could mean the lender is out of pocket.
Read more: The pitfalls of Buying with a Low Deposit.
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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