The Zoopla House Price Index showed that, as speculation circulated that the Chancellor would impose new taxes on homes worth £500,000 or more, buyer demand slipped by 12% and there were fewer sales agreed in the four weeks to 23 November, with a 4% decline.
Richard Donnell, executive director at Zoopla, said confirmation that no annual property tax would be introduced for homes worth £500,000 and more was “particularly positive” for the market and removed the threat from 210,000 homes.
House prices hit in Southern regions
This also impacted house prices, particularly in Southern England, where Zoopla recorded an annual price fall of 0.1% in London, a 0.1% drop in the South East of England, and a 0.2% contraction in the South West.
Conversely, house prices in more affordable regions rose, such as the North West, where there was a 2.9% year-on-year increase. Zoopla also said most regions outside the South of England recorded an above-average price increase.
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Across the UK overall, average house prices rose 1.3% annually to £270,000.
Donnell added: “The Budget bark was worse than the Budget bite for the housing market. Homebuyers 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 return with greater confidence.”
The market will start moving again
Tom Bill, head of UK residential research at Knight Frank, said: “There is more certainty after the Budget, which should allow demand to bounce back following months of speculation. However, 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.”
David Powell, CEO of Andrews Estate Agent, said: “There will be much disappointment around the £2m-plus 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, said: “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.”
