£782,000 £1,113,296 -10.1%
£623 £40.9bn 15,268
Source: Dataloft by PriceHubble, Bank of England, HMRC, ONS
GREATER CLARITY TO END THE YEAR
Despite pre-Budget uncertainty, the market remained resilient with steady activity and prices. Greater clarity should lift confidence and help buyers and sellers move ahead in the new year, especially if interest rates are cut later this month.
STICKY INFLATION
Throughout 2025 the housing market has remained resilient in the face of economic and political headwinds, with underlying fundamentals continuing to support steady demand. Persistent inflationary pressures have meant that interest rates stayed higher for longer than expected over the course of the year. CPI inflation began the year at 3% and has remained elevated, reaching 3.6% in October¹. Looking ahead, inflation is forecast to ease to 2.3% by the end of 2026². The Bank of England held interest rates at 4% in its November meeting, however, economist expectations are for a cut to 3.75% on 18 December³, which would help underpin activity heading into the spring 2026 selling season.
THE AUTUMN BUDGET
Chancellor Rachel Reeves’ Autumn Budget confirmed a new mansion levy for properties over £2m from 2028, alongside a 2% rise in property income tax from 2027. The new mansion tax will start with a £2,500 surcharge for the lowest band above £2m. While this is likely to be an unwelcome addition for some, it is not expected to materially disrupt activity in the prime market, though modest price adjustments may follow. The measure affects only the top 0.5% of homes, leaving the wider market untouched. Capital gains tax rates remain unchanged, and the withdrawal of the proposed annual property tax on homes over £500,000 offers important relief to both buyers and sellers.
DIP IN DEMAND
In the run up to the Budget, 59% of agents 4 reported that activity levels had been significantly affected by uncertainty, causing the usual seasonal slowdown to arrive a little earlier this year, with buyer demand now 12% below last year5 Mortgage approvals, a key indicator of future demand, slipped slightly in October, down 1% month-on-month and 5% below October 2024 6 . Despite pre- budget uncertainty, year-to-date mortgage approvals are 4% higher than in the same period last year, and transaction levels are just 2% lower year-on-year, with committed buyers still pushing ahead to secure purchases before year-end7. With the Budget now delivered and the rumours settled, buyers and sellers can refocus and move forward with decisions about their next steps.
MODEST PRICE GROWTH
Overall, property price growth remains steady despite the headwinds in the lead-up to the Budget and a rise in homes coming to market. Average house prices stood at £271,531 in September, 2.6% higher year-on-year but a slight softening of 0.6% from August¹. Elevated supply levels are expected to place some downward pressure on prices in the near term. However, OBR forecasts point to a modest recovery, with house prices projected to rise by an average of 2.5% per year over the period to 2030.
In England and Wales, the average price of a prime market property is £1,113,296, down by 10% year-on-year.
¹ONS, ² HM Treasury, Average of Independent Forecasts, ³Reuters, 4 PriceHubble, Poll of Subscribers, 5 Zoopla, 6 Bank of England, 7 HMRC
£553,000
£779,764
+2.7%
£360
£535,000
£719,860 -0.4%
£377
£579,000
£752,303 -2.1%
£379
£476,000
£611,131 -4.1%
£330
£722,000
£944,043 -9.1%
£465
£902,000
£1,253,040 -9.3%
£558
£423,000
£555,965 -0.8%
£297
£511,000
£676,152 -1.2%
£347
£527,000
£683,562 -3.3%
£331
£797,000
£1,058,109 -5.2%
£524
£1,430,000
£2,279,266 -16.7%
£1,144
Source: Dataloft by PriceHubble, Land Registry.
Source: Dataloft by PriceHubble, Land Registry.
£281,619
£782,000
£1,113,296
£232,564
£711,000
£1,049,568
Source: Dataloft by PriceHubble, Land Registry.
£276,534
£653,000
£883,928
£430,685
£988,000
£1,421,100
£227,716
£664,000
£995,110
£292,831 £796,000 £1,123,713
Source: Dataloft by PriceHubble, Land Registry.
Source: Dataloft by PriceHubble, Land Registry.
Source: Dataloft by PriceHubble, Rightmove.