The latest Rightmove House Price Index said this is also the largest fall in prices at this time of year since 2012.
The report noted that the number of homes for sale had hit the highest level for a decade, which is also adding downward pressure on prices, the firm said.
Rightmove said the upcoming Autumn Budget and housing affordability were “unsettling some potential movers”, and this was compounding the seasonal slowdown typical at this time of year.
A recent Mortgage Solutions poll echoed this, with two-thirds of brokers saying buyers were putting off purchase plans due to the Autumn Budget.
Rightmove found that over a third of homes available for sale have had an average asking price reduction, with the average reduction coming to 7%. This is the highest since February 2024.
The company said that as buyers were “more distracted than usual”, sellers who have had their properties on the market were “reducing their asking prices by more than the norm” to entice buyers.
Rightmove said buyer hesitancy was particularly noticeable at the higher end of the market, with sales agreed for homes priced over £2m down by 13% compared to the same period last year due to rumours around a potential ‘mansion tax’. Agreed sales overall have contracted by 5% year-on-year, as a comparison.
The number of new sellers in this area of the market has also contracted by around 9%, higher than in other areas of the market.
A similar trend is occurring for homes priced between £500,000 and £2m – which could be impacted by stamp duty and capital gains tax (CGT) changes – with sales down 8% year-on-year.
Homes priced under £500,000 have proven more “resilient”, with the number of sales only down 4% compared to last year.
This is promising, as this bracket accounts for around three-quarters of the market, but it could still be subject to Autumn Budget “jitters” around the impact on personal finances and affordability.
Looking at mortgage rates, the average two-year fixed rate is 4.41%, down from 5.06% this time last year.
The trajectory of mortgage rates has been slower in 2025 than expected, Rightmove noted, but there is still a “good chance” of a base rate cut in December, which could help mortgage pricing.
Coleen Babcock, property expert at Rightmove, said: “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[s] 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.”
Budget rumours on stamp duty and NI are ‘risk to growth’
Tanya Elmaz, managing director of intermediary sales at Together, said “uncertainty” ahead of this month’s Budget “seems to have made many buyers and sellers pause activity”.
She continued: “The government has an unenviable task in attempting to fix the struggling housing market. However, tax rises like the potential introduction of National Insurance for landlords and a reform of the stamp duty regime – rumoured to be included in the Chancellor’s statement – are a risk to growth. To add to this, deliveries on new housing stock are all but failing.
“The market may see a likely cut at the next Bank of England interest rate decision, providing more movement in the housing market, but that’s if measures announced in the Budget don’t spoil the party before it’s even started.”
Elmaz said those who are keen to progress with property plans “should be encouraged by subdued prices on offer, and have at their disposal a range of financial products and schemes available”.
“Speaking to a mortgage professional is a great way to assess all the options available before making a final decision,” she added.
Hamza Behzad, business development director at Finova, agreed that the figures show a “market in pause mode as buyers hold off ahead of the Budget”.
He said: “Speculation on reforms to property taxes – such as stamp duty, capital gains, and inheritance – has led some buyers, particularly at the higher end of the market in the South East, to take a ‘wait-and-see’ approach. But the overall picture is a positive one, especially given that the winter months are typically a slower period for the market.
“The Bank of England’s decision to hold the base rate at 4% has provided stability, prompting lenders to introduce competitive rates to the advantage of first-time buyers and remortgaging homeowners alike. There are other factors in play, too. The new Renters’ Rights Bill is now in force, and it remains to be seen whether the new regulatory requirements will result in landlords selling up their portfolios, creating new buying opportunities in the market.”
“The coming months will be key. How the market reacts to the Autumn Budget will determine whether this early momentum continues. In this climate, lenders must focus on offering flexible, tailored mortgage solutions to help proactive buyers take advantage of opportunities while others remain on the sidelines,” he added.
