House prices have fallen sharply in the past month as speculation over tax rises in the upcoming Budget prompts buyers and sellers to pause, with the top end of the market seeing the steepest slowdown.
New data from Rightmove shows that average new seller asking prices dropped by 1.8% in November, equivalent to £6,589, taking the national average to £364,833.
It is the largest November decline since 2012 and well above the typical 1.1% seasonal fall, reflecting both a decade-high volume of homes for sale and mounting uncertainty over potential changes to property taxation.
The cooling mood is already rippling through agreed sales. Over a third (34%) of homes on the market have had their asking price cut, with reductions averaging 7% – the highest level since February 2024. Rightmove said the usual year-end slowdown had “arrived early”, exacerbated by anxiety over measures expected to be unveiled in the late-November Budget.
HARDEST HIT
The upper end of the market, where rumours of new taxes have been most concentrated, has stalled decisively. Sales agreed for homes priced above £2 million -properties most exposed to the possibility of a mansion tax – are down 13% year-on-year, while new listings in the same bracket have fallen 9%.
Homes priced between £500,000 and £2 million, which could be affected by potential stamp duty changes in England and possible adjustments to capital gains tax, have also slowed noticeably, with sales agreed down 8% on the year.
By contrast, the mass market has proved more resilient. Properties under £500,000, which account for roughly three-quarters of all transactions and are not currently the focus of specific tax proposals, have seen sales fall by a more modest 4% compared with October 2024.
Analysts caution, however, that last year’s figures were inflated by activity in the south of England ahead of the April 2025 stamp duty increase.
BUDGET DISTRACTION
Despite the sharp October slowdown, national sales agreed so far this year remain 4% higher than the same period in 2024.
Colleen Babcock (main picture, inset), property expert at Rightmove, says the market was contending with “a big distraction” in the form of the forthcoming Budget.
She adds: “The decade-high number of homes available continues to restrict price growth, and many would-be buyers are waiting to see how their finances will be impacted.
“Average new seller asking prices are now 0.5%, or £1,759, cheaper than a year ago. This is clearly a buyers’ market.”
Affordability pressures remain a critical factor. The average 2-year fixed mortgage rate has edged down to 4.41%, from 5.06% a year ago, though the Bank of England’s decision to hold rates in November has tempered hopes of a swift improvement in borrowing costs. A cut in December “would be a welcome early Christmas present,” Babcock adds.
Analysts say the market is likely to remain subdued until the tax landscape becomes clearer. Should mortgage rates dip in the coming weeks and policymakers offer certainty, they argue, the market could begin 2026 with renewed momentum.
EXPERT VIEWS
Matt Smith, Rightmove’s Mortgage Expert says: “The Bank opted to maintain the status quo ahead of the widely anticipated Budget, but there’s still a good chance of another rate cut before the end of the year.
“We’re starting to see some notable weekly drops in rates, with some mortgage lenders offering headline-grabbing cheap rates as they compete for end-of-year business.
“Home-movers can expect some small drops in average mortgage rates to continue over the next few weeks.
“The Budget has created a lot of uncertainty and has had a big build-up, so once the announcements are out the way, home-movers can focus on planning with more confidence.”
MARKET OF TWO HALVES
Nick Leeming, Chairman of Jackson-Stops, says: “For prime country houses, it has been a market of two halves in November so far.
“Whilst some have chosen to wait for clarity after the Budget – whatever news that may bring – others have accelerated their transaction timeframes in order to exchange before the 26th and avoid any surprises.
“Wider caution among buyers of higher valued property in the run-up to the Budget reflects the variety of trailed policies from the government, alongside a decade-high level of property listings softening sellers’ pricing power.
“We saw a similar level of caution from the Bank of England’s decision to hold interest rates in November, just as movers wait with calculators in hand to see if a reset in tax could shift the numbers and impact any immediate plans.
“Supply and demand still remain fundamentally stable.”
“However, supply and demand still remain fundamentally stable across the national picture, reflected in relatively stable transaction figures and continued listings. Regional disparities are becoming more pronounced. We’re seeing unseasonably high enquiries in places like Exeter, Chester and Cornwall.
“For now, we have a balanced if cautious market, with a pragmatic commitment from buyers and sellers to move forward.
“The housing market can take comfort in continued completions and stable house prices. For those looking further ahead to an early 2026 move, getting your property ready for a new year move is a tactic that transcends political announcements.
“Those ready to adapt and take a long-term view will be best placed when the dust settles.”
ANTICIPATION WORSE THAN RESULT
Bertie Russell, Managing Director at Russell Simpson in London, says: “Typically the sales market in Prime Central London is made up of a variety of buyer segments with a wide range of nationalities, needs and requirements, with wealth created and held in a vast variety of industries and currencies.
“With the looming Budget, needs-based buyers are the top category of most active buyers in the market. We are starting to see more investors and pied-à-terre buyers looking, as well as a larger swathe of US buyers, who seem to be less impacted by tax changes from 2024 and less concerned about the impending 2025 Budget.
“The uncertainty created by the Budget is forcing some of the other segments to pause their search or hold off from making offers until there is confirmed news.
“Potential sellers are also waiting to see what happens before confirming their plans, meaning we are seeing fewer potential sellers than usual at this time of year and releasing fewer properties to market.
“Having experienced many elections, Budgets and other economic or political speed bumps like this in the past, the anticipation and the unknown have always been worse than the result.
“I would predict that this slight slowdown from buyers and sellers in the autumn market of this year will likely lead to a busy few weeks before Christmas and more definitive action taken by both buyers and sellers in the new year.”
SOFTENED SELLER EXPECTATIONS
Jeremy Leaf, north London estate agent and a former RICS Residential Chairman, says: “These figures, though of course reflecting asking rather than sale prices, reinforce the message given by recent improving mortgage approval numbers, as well as what we’ve seen on the ground.
“Seller expectations have inevitably softened with budget tax increases certainly on the way and so much more choice of property for buyers.
“However, our sale prices have certainly not collapsed. The overwhelming majority of existing sales are continuing, albeit more cautiously, while both parties seek to find a ‘new normal’.
“As the big day approaches, we’ve noticed most aspiring buyers and sellers becoming more serious and trying to adjust their sights in anticipation of a better understanding of the likely impact of the changes.”
CAUTIOUS MARKET
Mary-Lou Press, President of NAEA Propertymark (National Association of Estate Agents), says: “The market is increasingly cautious as speculation over the upcoming Budget fuels uncertainty.
“When buyers and sellers face mixed signals about potential tax changes, it’s natural to see hesitation and a sharper seasonal slowdown than usual.
“While efforts are supported to ensure stability and fairness within the housing market, continued rumours of major reforms, from stamp duty and Capital Gains adjustments, to a potential mansion tax, risk undermining confidence and discouraging transactions.
“Despite softer sentiment in the higher-value sectors, the broader picture remains more resilient, helped by gradually improving mortgage rates and better affordability. Our member agents continue to report steady interest from committed movers, especially in the mainstream market, typically below £500,000.
“Providing clarity and stability will be key to maintaining momentum as we move into 2026.”
BUYER AND SELLER ACTIVITY COULD PICK UP
James Nightingall, founder of HomeFinder AI, says: “Property values always fluctuate to a certain degree but we are unlikely to see drastic changes this month as buyers stay put due to fear over the Autumn Budget impact.
“Depending on what the Chancellor will announce, buyer and seller activity could pick up over the coming months but one thing is clear – the property market has not faced such instability amid political uncertainty in a long time.”
