Confidence hit by tax speculation
Stamp duty liabilities are rising for a growing share of homebuyers, with more than a third now paying over 2.5% of the property price due to frozen thresholds and higher values, according to Zoopla data.
Zoopla’s analysis of sales by existing homeowners shows that the proportion paying above 2.5% of the purchase price in stamp duty has increased from about one-fifth in 2019 to more than one-third in 2025. Stamp duty thresholds were last revised in 2014, during which time average prices have risen 47%. More than half of first-time buyers in southern England now pay stamp duty, rising to 80% in London, compared with fewer than 10% elsewhere. Over 90% of existing homeowners in southern England and the Midlands pay the tax.
The Autumn Budget did not change stamp duty land tax, leaving the current cost framework in place. Instead, Chancellor Rachel Reeves confirmed a council tax surcharge for homes valued over £2m in England from April 2028 and higher property income tax rates for landlords from April 2027. The basic rate will rise from 20% to 22%, the higher rate from 40% to 42% and the additional rate from 45% to 47%, according to official Budget documents. The Office for Budget Responsibility expects these tax changes to reduce annual house price growth by around 0.1 percentage points from 2028, and forecasts the average UK house price to increase from £260,000 in 2024 to just under £305,000 in 2030.
Speculation over wider property tax changes contributed to a slowdown since late summer. Zoopla recorded buyer demand down 12% in the four weeks to 23 November compared with the same period last year, while sales agreed were 4% lower.
The company also reported a separate decline in demand for homes priced above £500,000 of around 11% in the five weeks to September 29, citing buyers reconsidering plans during the pre-Budget period.
Price performance continues to diverge between regions. Zoopla reported the first annual house price falls in 18 months across southern England in October: London –0.1%, South East –0.1%, South West –0.2%.
The North West recorded 2.9% inflation, with 2–3% gains across northern England, Scotland and Wales. Across the UK, prices averaged £270,200, up 1.3% annually.
Other indices show similar cooling. The Office for National Statistics recorded a 0.6% monthly fall in prices between August and September, with average values at £271,531 and annual growth at 2.6%. Halifax put the average UK price at £299,862 in October, up 0.6% month-on-month and 1.9% annually, while Nationwide reported £272,226, with monthly growth of 0.3% and annual growth of 2.4%.
More than 210,000 homes listed above £500,000 — around one-quarter of UK listings and half in London — had been the focus of speculation over a possible new annual property tax. That did not appear in the Budget.
The government instead introduced the targeted council tax surcharge for homes valued above £2m, structured in four bands starting at £2,500 a year and rising to £7,500 for properties above £5m. The charge will apply to property owners on top of existing council tax. The government expects fewer than 1% of properties to fall within scope and forecasts revenue of more than £400m in 2029-30.
Zoopla noted that the usual Christmas slowdown started earlier this year, with demand 12% lower year-on-year but sales agreed only 4% lower, supported by committed buyers aiming to complete transactions before year-end.
“After a long lead-in, the Budget bark was worse than its bite for the housing market,” said Richard Donnell, executive director at Zoopla. “Homebuyers and sellers will welcome the end of the uncertainty that stalled housing market activity since the late summer.”
The Royal Institution of Chartered Surveyors has described the market as being in a holding pattern and expects activity to respond once households fully assess the tax changes. David Powell, CEO of Andrews estate agent, said: “I suspect house price growth in the South may remain static in the short-term whilst the market adjusts to the new normal. I expect the market to bounce back from any damage caused by leaked or shelved policies leading up to the government’s budget and we will see activity levels increase across the South throughout 2026.”
