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The UK’s housing market is showing signs of slowing down amid speculation that Rachel Reeves could announce tax increases on property in next month’s budget.
In a sign of growing caution among house hunters, figures from Rightmove showed that both the number of new buyers contacting estate agents about homes for sale, and the number of new sellers coming to market, slumped by 5% in September compared with the same month a year earlier.
The website said the market remained “resilient”, but warned that the typical post-summer bounce in activity was failing to materialise.
“Speculation that the budget may increase the cost of buying or owning a property at the higher end of the market, has given some movers, particularly in the south of England, a reason to wait and see what’s announced in the budget,” said Colleen Babcock, a property expert at Rightmove.
Reeves signalled in a Guardian interview last week that those with the “broadest shoulders” should pay their “fair share” of taxes, and promised new measures to tackle inflation, as she draws up next month’s crunch budget.
The Treasury has explored a new tax on the sale of homes over £500,000 and the removal of the capital gains tax exemption on primary residences above £1.5m as ways to boost income for the government.
The introduction of a new council tax band for higher-value properties in England could also be considered, while the chancellor has faced pressure from Labour MPs to overhaul property taxes in next month’s budget.
According to the latest snapshot from Rightmove, the average price of property coming to the market for sale rises by 0.3%, or £1,165, in October to £371,422. It said this rise was below the 10-year average for the average October bounce of 1.1%.
Rightmove said some of the recent slowdown in activity could be attributed to a strong September in 2024, which was boosted by the first Bank of England rate cut in four years, setting a high benchmark for a year-on-year comparison.
However, property experts said buyers, sellers and high street lenders were “hitting pause” before the budget. “[There are] some continuing jitters about what the upcoming budget might contain,” Rightmove said.
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Tom Bill, head of UK residential research at Knight Frank, said: “Transaction numbers over the last six months have been supported by stable mortgage rates and softer prices as sellers come to terms with the fact that high levels of supply mean it is a buyer’s market.
“However, demand is wavering for the second successive year as the autumn market gets under way, as speculation over the budget becomes a prolonged and frustrating game of ‘guess the tax rise’.”
A Treasury spokesperson said: “We are taking action to get Britain building so more new homes are available, including through strengthening call-in powers, tearing up burdensome regulations, and streamlining planning permissions with AI to get spades in the ground more quickly.
“The budget will strike the right balance between making sure that we have enough money to fund our public services while ensuring we can bring growth to boost living standards.”
