Property costs in London and the South recorded their first fall in 18 months, pushed by Finances uncertainty and extra properties on the market.
Home costs have fallen throughout London (-0.1%), the South East (-0.1%) and the South West of England (-0.2%), Zoopla’s home worth index exhibits.
Purchaser demand has fallen by 12% year-on-year, whereas gross sales agreed fell by 4% amidst Finances uncertainty.
David Powell, chief government of Andrews property agent, mentioned: “After months of hypothesis, I’m dissatisfied the federal government has missed this chance to handle the challenges round stamp responsibility and affordability.
“There will likely be a lot disappointment across the £2m+ mansion tax and it’s possible the South will get hit the toughest, we are going to eagerly await how this impacts the market and the unintended penalties which will comply with.
“I believe home worth progress within the South could stay static within the quick time period while the market adjusts to the brand new regular. I count on the market to bounce again from any harm brought on by leaked or shelved insurance policies main as much as the federal government’s Finances and we are going to see exercise ranges improve throughout the South all through 2026.”
UK home costs have elevated by 1.3% year-on-year to achieve a median worth of £270,200.
Most areas and counties exterior the south of England are registering above common worth inflation, with house values within the North West of England 2.9% larger than a 12 months in the past.
The stamp responsibility worth thresholds for present house homeowners have been set in 2014, whereas home costs are 47% larger over this time.
That is creating ‘fiscal drag’ for house patrons within the housing market with patrons of common priced properties paying extra
Since 2019, the variety of properties purchased by present owners the place the price of stamp responsibility is greater than 2.5% of the acquisition worth has jumped from 21% to 33%.
The price of shopping for is rising for common house patrons in cities throughout the south of England and the case for the abolition of stamp responsibility as a part of wider property reforms stays a powerful one – although the Chancellor determined to depart the tax alone within the Autumn Finances.
Richard Donnell, government director at Zoopla, mentioned: “The Finances bark was worse than the Finances chunk for the housing market. Dwelling patrons and sellers will welcome the tip of the uncertainty that has stalled housing market exercise for the reason that late summer season. Our information exhibits the underlying demand to maneuver house stays sturdy. With larger certainty we count on a rebound in housing market exercise that builds into the brand new 12 months with households who paused house transferring selections over current months return with larger confidence.
“The elimination of the specter of a brand new annual property tax from 210,000 properties is especially optimistic for the market and can assist revive exercise in higher-value areas throughout southern England the place home costs are underneath strain.”
Tom Invoice, head of UK residential analysis at Knight Frank, mentioned: “There’s extra certainty after the Finances, which ought to permit demand to bounce again following months of hypothesis.
“Nevertheless, there are nonetheless questions across the Mansion Tax. Till it’s launched in 2028, patrons and sellers face uncertainty round worth thresholds and even as soon as valuations are accomplished, they might be challenged, which might lengthen the limbo. Because the OBR has admitted, that might weigh on demand and transaction exercise. The opposite danger is the precedent of a brand new tax.
“Over time, extra properties will get dragged into the mansion tax web, which implies the proportion of terraced homes, flats and semi-detached properties will develop, significantly within the capital. The time period ‘mansion tax’ may more and more really feel like a misnomer.”
