Speculation over tax changes prompts caution among affluent buyers, Zoopla data shows
The UK housing market has seen a steady return of buyers over the past two years, supporting a gradual recovery in property transactions. However, new figures from Zoopla’s latest House Price Index indicate that uncertainty regarding potential tax changes is beginning to affect activity at the upper end of the market.
Demand for homes priced above £500,000 has declined by 4% compared to the previous year, while new listings in this segment have dropped by 7%. This shift comes as some buyers adopt a cautious approach ahead of the government’s November Budget.
House price growth has continued to moderate, falling from 1.9% in December 2024 to 1.4% in August 2025. The average property value in the UK now stands at £271,000, representing an annual increase of £4,350.
Regions such as London, the South East, South West, and Eastern England have experienced the slowest price growth, with increases of less than 0.5%. Higher stamp duty and affordability issues are cited as contributing factors. In contrast, areas such as Northern Ireland and the North West have recorded stronger gains, with prices rising by 7.9% and 3.1% respectively.
The average estate agent is currently marketing 36 homes, a 20% rise from last year and an 8% increase year-on-year. Agreed sales are also up by 3% over the same period, as buyers seek to take advantage of the autumn market. Nonetheless, speculation about changes to property taxation is creating headwinds, particularly for higher-value properties.
Zoopla’s analysis highlights a 4% fall in demand and a 7% reduction in new listings for homes over £500,000 in the past five weeks. For properties above £1 million, demand has dropped by 11%, and new listings are down by 9%. This contrasts with the broader market, where both supply and demand have remained stable.
Currently, one in three properties for sale is priced above £500,000, and 8% are listed for more than £1 million. The impact of tax speculation is most evident in high-value markets, especially in London and the South East. While the mainstream market continues to show resilience, the prospect of new policies in the forthcoming Budget has led some affluent buyers and sellers to delay decisions.
In more affordable regions, price growth remains robust. Average mortgage rates for new five-year fixed deals are between 4% and 5%, enabling buyers to borrow 20% more than six months ago for the same income. This has underpinned demand, particularly among first-time buyers and those purchasing in lower-priced areas.
Markets with average property values below £200,000 are seeing the fastest price increases, at 2.8%. Conversely, areas with average prices above £500,000 are experiencing little to no growth.
Outside Northern Ireland, annual house price rises of over 4% have been recorded in five postal areas: Kirkcaldy, Oldham, Tweeddale, Motherwell, and Llandrindod Wells. Meanwhile, southern England continues to see annual price falls of around 1%, particularly in locations with a high concentration of second homes such as Bournemouth, Truro, Exeter, Torquay, and parts of central London.
Recent changes to council tax for second homeowners have contributed to increased listings and downward pressure on prices in these areas.
“The housing market has experienced a sustained increase in market activity over the last 18 months as mortgage rates have stabilised,” said Richard Donnell (pictured right), executive director at Zoopla. “The market is on track for the most sales since 2022, but without rapid house price inflation.
“Pre-budget speculation over possible tax change is a regular occurrence, but this summer, it has been bigger than usual which has led some buyers and sellers to delay home moving decisions for homes priced over £500,000. The wider market remains largely unaffected. Serious buyers should think twice before delaying as while the Budget is two months away it takes, on average, six to seven months to find a property and complete a sale.”
According to Nathan Emerson, chief executive of industry body Propertymark, a slowing in house price growth will still be welcome news for those serious about moving home, especially first-time buyers.
“However, there are underlying factors affecting affordability and confidence, such as economic uncertainty and inflation, making people cautious about their finances, and stagnating income and wage growth,” Emerson said. “Recent changes to Stamp Duty across England and Northern Ireland have also reduced buyer affordability, and rumours of further alterations are bound to create some uncertainty.
“For some, however, especially current homeowners, a slow tapering in interest rates has allowed lenders to introduce more competitive mortgage products and has decreased the monthly cost for those with variable or tracker mortgages, allowing them to refinance to lower rates. We now look to the Bank of England’s next interest rate announcement in November and hope to see positive introductions through the UK government’s Budget that will help ease affordability pressures for buyers looking to step onto or move up and down the housing ladder.”
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
