Speculation over new property taxes fuels southern market jitters
An excess of homes for sale has contributed to a 0.1% annual fall in average asking prices across Great Britain, despite a modest 0.4% monthly increase to £370,257.
This marks the first annual decline in asking prices since January 2024, with the drop attributed to sustained competitive pricing as sellers seek to stand out in a crowded market.
The impact of this oversupply is most evident in London and the south of England, where the number of properties available has risen sharply. Listings in the south are up 9% compared to last year, far outpacing the 2% increase seen in other regions. Sellers in these areas are adjusting prices to attract buyers, resulting in more subdued price trends and longer times to secure a sale.
While the overall number of sales agreed has risen by 4% year-on-year, the south continues to underperform relative to the rest of the country. Ongoing speculation about possible property tax changes in the forthcoming Autumn Budget has added further uncertainty to the market, particularly in higher-priced segments.
“We’d expect to see a slight uptick in new seller asking prices in September, with the traditional back to school season boosting activity heading into autumn,” said Colleen Babcock (pictured right), property expert at Rightmove. “This year’s 0.4% September price rise is a little lower than the norm, which is an average of 0.6% at this time of year.
“However, prices have now dipped slightly from where they were at this time last year after a summer of competitive pricing by sellers, and it’s the south of England which is driving this small dip. It’s the sensible and attractive seller pricing we’ve been reporting which has been helping to drive more sales activity compared to last year. Static house prices, rising wages, and lower mortgage rates all assist buyer affordability, which has led to an increase in the number of sales agreed compared to a year ago.”
The Bank of England is widely expected to maintain its current rate at its meeting later this week. Since the first rate cut in August 2024, the average two-year fixed mortgage rate has fallen from 5.03% to 4.52%. For buyers at the average asking price, this represents a monthly saving of just under £100, assuming a 20% deposit and a 30-year mortgage term. Improved affordability, competitive pricing, and a wide choice of properties are supporting buyer activity.
Among northern regions, only the West Midlands recorded a yearly decrease in new seller asking prices, down 0.1%. In contrast, the South West saw a 1.3% drop, while the North West experienced a 3.2% rise, highlighting the relative weakness in the south.
The number of homes for sale has reached a decade high, particularly in the south, where listings are up 9% compared to last year, versus 2% elsewhere.
Properties in the south also take an average of five days longer to secure a buyer than those in the north and Wales, with Scotland seeing faster transactions. Despite these challenges, agreed sales in the south have increased by 3% year-on-year, while other regions have seen a 5% rise.
With the Autumn Budget scheduled for Nov. 26, speculation around potential property tax changes has raised concerns that the south’s performance could deteriorate if such measures are introduced.
Rightmove’s data indicates that, so far, rumours of stamp duty and mansion tax changes have not led to significant shifts in mover behaviour. However, uncertainty ahead of the Budget could dampen activity in higher-priced segments. Analysis suggests that any changes to stamp duty would disproportionately affect London and the south, with 59% of sales in the capital potentially impacted, compared to 22% across the rest of England and just 8% in the North East. Furthermore, 11% of homes in London are valued at £1.5 million or more and could fall under a proposed mansion tax, compared to 2% elsewhere.
“Recent Stamp Duty threshold changes and concern regarding the forthcoming budget have added fuel to the fire when it comes to the confidence of potential home movers,” said Mary-Lou Press, president of industry body NAEA Propertymark.
“As mortgage products start to improve and provide light at the end of the tunnel for many, people might now be faced with additional tax to pay when purchasing, potentially adding further pressure on finances.
“House price growth is a sign of wider economic health; therefore, without clear support for people to step onto or move up and down the housing ladder, there’s a concern that this might stagnate the wider property market and prove a setback regarding restoring financial stability.”
For Tomer Aboody, director of specialist lender MT Finance, stamp duty reform is urgently needed to allow more homes to come to the market, so that downsizers are encouraged to sell and enabling families to buy.
“The property cycle is a huge focal point of the economy in the UK, and any government discouraging this, or not actively trying to bolster this, will see the economy falter,” he said.
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