UK housing market cools ahead of autumn budget uncertainty

The UK housing market is experiencing a distinct slowdown as uncertainty builds around the upcoming autumn budget. According to the Royal Institution of Chartered Surveyors, activity has stalled, with both buyer demand and the supply of new properties falling further into negative territory during October. Many survey participants cited fears of increased property-related taxation, pointing specifically to potential changes to stamp duty, capital gains, and inheritance tax.

This caution extends most notably to higher-end and London properties, where several estate agents noted stalled sales activity above one million pounds. Surveyors reported that new buyer enquiries registered a net balance of minus 24 per cent in October, a decline from minus 21 per cent the previous month. This marks the weakest reading for buyer demand since April, indicating a nationwide cooling ahead of the budget announcement.

Agreed property sales remained weak, dropping to a net balance of minus 24 per cent from minus 17 per cent in September. Surveyors expect only a minor improvement in activity over the course of the next year, with seven per cent anticipating greater activity as 2026 approaches. The market has witnessed a sustained drop in new vendor instructions, with a negative balance for the third consecutive month, reaching minus 20 per cent, the lowest level since 2021. Appraisal activity, an indicator for future property listings, has also softened, standing at minus 37 per cent, as potential vendors adopt a cautious approach.

The survey indicates that the housing market is expected to remain subdued until at least the end of 2025, with prospects for a meaningful recovery likely to be delayed until early 2026. Uncertainty regarding the impact of the budget and seasonal conditions are expected to influence this timeline significantly. Tarrant Parsons, head of market research and analysis at RICS, commented that the coming months will be critical in determining whether clarity on housing taxation will help stabilise the market or whether further measures may deepen the present slowdown.

Estate agents polled by the Royal Institution expect house prices to soften slightly over the next three months, but anticipate a return to positive growth over the next twelve months. Notably, the fall in house prices recorded by RICS contrasted with other notable surveys. Halifax, a leading mortgage provider, reported a 0.6 per cent increase in house prices for October, representing the fastest pace since January.

The debate over stamp duty remains prominent among industry figures and policymakers. Kirstie Allsopp, speaking at a Treasury Committee hearing, advocated for the abolition of stamp duty altogether, expressing the view that the current regime stifles market mobility and adversely impacts first-time buyers. Concerns persist that speculation about changes to stamp duty is altering buying behaviour, with many buyers stretching finances to avoid paying stamp duty multiple times, and homeowners opting for property alterations over moving due to transaction costs.