UK housing market falters in anticipation of Autumn Budget

Professor Joe Nellis is economic adviser at MHA, the accountancy and advisory firm, and a co-creator of the Halifax House Price Index.

UK house prices in September fell by 0.3 per cent from August, as the market reacts to affordability pressures mounting and speculation around property tax reforms in the Autumn Budget causing potential buyers and sellers to pause.

Prices are now only 1.3 per cent higher than a year ago, a clear slowdown from the 4.6 per cent year-on-year growth in September 2024 and the faster growth rates seen in the second half of 2024 more generally.

The actions of first-time buyers drive the market, and they remain under intense pressure from high deposits, elevated mortgage rates, and rising living costs, as well as having a particular interest in potential property tax reforms.

Yet there could be some light at the end of the tunnel. There is speculation that the Treasury is considering spreading stamp duty land tax (SDLT) payments across several years to jump start the property market.

Breaking SDLT into instalments would lower the cash needed at the point of purchase, unlocking capital and giving buyers more breathing room for deposits, moving costs, and renovations, while helping more first-time buyers onto the housing ladder.

Further relief is emerging as fixed-rate mortgages dip below four per cent, but borrowing hurdles remain high.

Price growth is expected to pick up at a gentle pace through the remainder of 2025, with a slight rise in 2026 if inflation cools and mortgage costs fall further. But with affordability stretched and policy decisions looming, the next few months could set the tone for whether the market cools further or stabilises into a soft landing.

Ahead of the Budget, slower house price growth is not what the Chancellor would have wanted, with the chance of reduced stamp duty receipts narrowing her room to manoeuvre on spending pledges. We wait to see if her decisions on 26th November will do anything to kick the market into gear.