House prices begin to fall as Budget fears bite

House prices have fallen annually for the first time this year as Autumn Budget fears create market uncertainty, Rightmove reports.

Colleen Babcock (pictured), property expert at Rightmove, says average asking prices are now 0.1% below last year at £370,257 following several months of muted price growth.

The data has provided the first real signs of the impact of the Chancellor’s looming Budget and the speculation around property tax, as it is based on asking prices rather than completed sales.

Late Budget

Property tax rumours have been circulating since mid-August, with speculation that Stamp Duty could be replaced with a seller’s tax on properties over £500,000, that NI could be added to landlords’ incomes, and a Mansion Tax could be imposed on houses over £1.5m when Chancellor Rachel Reeves delivers her Budget on 26th November.

The unusually late Budget timing – nearly a month later than usual – is prolonging uncertainty and Rightmove says agents are reporting it is affecting confidence, particularly in higher value markets.

It has meant that, alongside decade-high supply levels, sellers have been forced to cut their prices over the summer to attract buyers in an increasingly competitive market.

And the biggest price falls have been in London and the southeast, with the Capital’s high prices mean it is particularly exposed. 59% of its sales are over £500,000 and 11% over £1.5 million.

This kind of extended uncertainty can affect market activity, especially in the higher price brackets.”

Babcock says: “Rumours of property tax changes began swirling in mid-August, and with the Budget itself not arriving until the end of November, this kind of extended uncertainty can affect market activity, especially in the higher price brackets.

“Movers want to be confident in planning their moving costs.” And adds, “it’s understandable that those who could be negatively affected by the rumoured changes might be in the process of reassessing their short- and medium-term plans.”

Rightmove adds, though, that the recent price falls and the more attractive pricing have driven stronger buying activity, with the number of sales agreed 4% higher than it was this time last year.

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Author: Gemma