UK House Price Growth Slows Amid Budget Uncertainty
House price growth in the UK is slowing down, with a year-on-year increase of about 2.2-2.8% in mid-2025. However, this is a significant slowdown from earlier high growth rates. Meanwhile, buyers and sellers are hesitant due to rumours of tax changes in the upcoming Budget.
Tom Bill from Knight Frank expects house price growth to further decelerate due to high supply and Budget uncertainty. Jeremy Leaf, a north London estate agent, reports that buyers and sellers are 'sitting on their hands' awaiting the Budget's outcome. Richard Donnell of Zoopla warns that delaying home moving decisions could lead to missed opportunities, as the average time to find a home and complete a sale is six to seven months.
Demand for high-end homes has decreased, with a 11% drop in demand for homes worth above £1 million and a 9% reduction in new listings. Zoopla's House Price Index shows a 4% drop in buyer demand and a 7% reduction in new listings for homes over £500,000 in the past five weeks. Capital gains tax could also be applied to the sale of homes above £1.5 million, adding to the uncertainty. Chancellor Rachel Reeves is rumoured to be planning an overhaul of stamp duty, potentially replacing it with a national property tax on home sales above £500,000.
House price growth has slowed to 1.4% in August, down from 1.9% in December 2024. Despite this slowdown, areas with lower average prices, such as Kirkcaldy, Oldham, Tweeddale, Motherwell, and Llandrindod Wells, are seeing the fastest price increases. However, the uncertainty around the Budget is causing homebuyers and sellers to delay their moving decisions, which could have implications for the housing market in the coming months.
