London estate agents today warned of “challenging” housing market conditions ahead of the Budget as latest figures showed prices flatlined over the summer.
Britain’s biggest building society Nationwide said the average price of a home in the capital rose by just 0.6% to £527,694 in the year to the third quarter covering June to September, That represents a slight slowdown from 1.4% annual growth in the previous quarter.
London was the second slowest growing regional market after the “”outer south east” where prices were only 0.3% higher year on year.
The figures came as agents said much of the London market had slowed to a near halt in September amid speculation about the contents of Rachel Reeves’s second Budget on November 26. There have been suggestions of changes to stamp duty rates for higher value properties, including a levy on sales over £500,000, or even a wealth tax.
Matthew Thompson, head of sales at agents Chestertons, said: “September has been a challenging month as many buyers paused their decisions ahead of the November Budget. Uncertainty over potential tax changes is holding back activity but if the announcements bring clarity, confidence could return quickly and create an unusually busy end to the year.”
Tom Bill, head of UK residential research at agent 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.
“Stable mortgage rates so far this year have encouraged buyers to act but 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%. As it increasingly becomes a buyer’s market, sellers will need to be realistic with asking prices to get buyers through the door for a viewing.”
Alice Haine, personal finance analyst at online investment platform Bestinvest by Evelyn Partners said: “While buyers are gradually adjusting to the stamp duty changes introduced in April, when thresholds reverted to their previous, lower levels, a new wave of uncertainty is emerging around what property tax measures the Chancellor may target in her fiscal statement on November 26.
“Proposals reportedly under consideration include a new national sales levy to replace stamp duty, council tax reform and capital gains tax applied to the sale of high-value residences. Even landlords, already under pressure from higher taxation and tighter regulation, could be targeted with National Insurance applied to rental income – yet another blow for the private rental sector.
“The swirl of speculation has prompted some buyers, particularly at the top end of the market, to put purchase plans on pause. This could dampen market activity over the next couple of months if buyers wait to gain see what they are contending with before they commit. “
© The Standard Ltd