Katie Williams
Homebuyers have started to return to the market following a lull in the wake of April’s stamp duty changes, but the outlook remains mixed as the Autumn Budget looms.
House prices rose by 0.5% in September, reversing a 0.1% contraction in the month prior, according to new data from Nationwide.
The uplift has brought the average price of a house in the UK to £271,995, representing a 2.2% annual rise.
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While homeowners will be pleased that the average value of a property increased last month, fears remain that taxes on property could be increased in November’s Budget.
Tom Bill, head of UK residential research at Knight Frank, said: “High levels of supply and a growing sense of uncertainty as November’s Budget approaches are both keeping downwards pressure on demand and prices.”
In particular, owners and buyers of higher-value homes could be stung by a rumoured property tax on the sale of homes above £500,000 that replaces the current stamp duty regime.
Similarly, homes listed at over £500,000 have seen a 4% drop in buyer demand and a 7% reduction in new listings over the same time period.
Where are house prices forecast to go?
The latest sentiment survey from the Royal Institution of Chartered Surveyors (RICS) showed confidence in the housing market dropped in August.
Though agents still expect house prices to grow over the next 12 months, they were less confident in this prediction than at any point since December 2023.
Other forecasters have also tempered their expectations. Savills is now expecting 1% growth in the mainstream market in 2025, down from 4% previously. It cited ongoing stamp duty effects, broader economic challenges and pre-Budget jitters.
Knight Frank has also cut its house price growth forecast. While the firm says stable mortgage rates have encouraged buyers to act so far this year, there is still uncertainty ahead of the Budget.
“A repeat of last year’s game of ‘guess the tax rise’ ahead of the Budget means hesitancy will rise over the next two months, which prompted us to recently downgrade our 2025 UK forecast to 1% from 3.5%,” Bill added.
Although growth has been slow, average property prices are still hovering around record highs. The average UK property costs £270,000, according to Land Registry data published on 17 September – around £8,000 higher than a year ago.
What do official house price figures show?
There are at least five different indices that measure how much UK house prices have gone up or down over the past month and year, but the most authoritative source is HM Land Registry.
The Land Registry has the most comprehensive data set, as it includes cash purchases as well as those financed through a mortgage, but the main drawback is that it is published with a six-week time lag. This means other sources like Nationwide and Halifax can give a better snapshot of current conditions.
The latest Land Registry report, published on 17 September, shows prices rose by 0.3% on a monthly basis in July. On an annual basis, prices rose by 2.8% – a slowdown from June’s revised estimate of 3.6%.
Among the UK nations, prices grew at the fastest rate in Northern Ireland (5.5% annually). Scotland came in second place (3.3%), followed by England (2.7%) and Wales (2%). Of the English regions, the North East experienced the fastest growth (7.9%), while London saw the slowest at 0.7%.
Using the “house prices in your area” report from the Office for National Statistics can help you understand how prices have changed in your borough or local authority area. This also uses Land Registry data.
“The latest figures point to a housing market that is stable but still weighed down by affordability pressures,” said Karen Noye, mortgage expert at wealth management firm Quilter. This is most obvious in areas like London and the South East, where prices are rising more slowly because homeownership is out of reach for many.
High borrowing costs are not helping. “In practical terms, fixed mortgage rates have eased slightly from last year’s peaks as swap rates drifted lower earlier in the summer, but borrowing costs remain significantly higher than those faced by buyers just a few years ago,” Noye said.
Property asking prices under pressure
Asking prices are a useful barometer for market sentiment as it currently stands. These snapshots tend to be published only a few weeks after the data was recorded. The drawback is that asking prices don’t necessarily reflect the final sold price.
The latest asking price data from property site Rightmove, published on 15 September, shows that asking prices are 0.1% lower than a year ago, despite rising by 0.4% in the first few weeks of September. The typical property on the site is now being listed at £370,257, which is around £500 less than in September 2024.
A glut of properties on the market in southern England is partly to blame. The number of homes for sale in the region is 9% higher than a year ago, compared to 2% elsewhere. It takes an average of five days longer to find a buyer in the south compared to the north and Wales, Rightmove said.
Given that it is a buyer’s market, experts are encouraging sellers to be realistic when setting a price. “Sellers who reduced their price expectations over the summer are now creating more realistic conditions for sales, which is keeping things moving,” said Matt Giggs, founder of estate agency firm The Giggs Group.
Will house prices rise beyond 2025?
Despite trimming their forecasts, some experts think house price growth could pick up in 2026 and beyond. Savills is currently forecasting 4% growth in 2026, 6% in both 2027 and 2028, and 5.5% in 2029.
The estate agency expects wages to grow 22% between 2025 and 2029. Combined with a strengthening economy in the latter part of this time frame, it thinks it will “boost buyer confidence and the willingness to take advantage of improved mortgage conditions”.
Savills also thinks falling mortgage rates and more relaxed affordability tests from lenders could boost transaction volumes, making it easier for first-time buyers to get onto the housing ladder. Following encouragement from policymakers, some lenders are allowing mortgage customers to borrow more than they could previously.
Under the old rules, less than 10% of new mortgages exceeded 4.5 times a borrower’s income, but the Bank of England recently said it would be happy to see that percentage rise to more than 15%. Nationwide said it means applicants can borrow £28,000 more on average.
Knight Frank has more muted expectations than Savills, but still expects the rate of house price growth to pick up from 2026. It is forecasting growth of 3% in 2026, 4% in 2027, 4.5% in 2028 and 5% in 2029.
Will stamp duty be replaced?
A lot could change between now and the end of these forecast periods, including interest rate expectations, the health of the UK economy, and government policy.
In recent weeks, headlines have focused on rumoured property taxes that could be considered as part of the Autumn Budget.
Areas of speculation have included replacing stamp duty with an annual property tax for homes worth more than £500,000, and ending the capital gains tax exemption on first homes worth more than a certain threshold (such as £1.5 million). There are also rumours that landlords could be hit with National Insurance on rental income.
Zoopla believes a stamp duty replacement could impact market activity in higher-value markets. In August, areas where average prices were below £200,000 saw growth of 2.8%, according to the property site. Pricier areas (£500,000+) “barely moved”. This could reflect broader affordability pressures as well as Budget concerns.
“Our data shows both buyer demand and new listings for homes priced above £500,000 are down compared with a year ago, as some buyers pause to see what the Autumn Budget may bring,” said Richard Donnell, Zoopla’s executive director of research.
As with all pre-Budget speculation, it is possible these rumours will come to nothing. With this in mind, homebuyers and movers should avoid being tempted into knee-jerk reactions and instead focus on current market conditions and their own personal circumstances when deciding on the best time to buy or sell.
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