Fresh data from Rightmove indicates that mounting speculation over tax changes in tomorrow’s Budget has injected uncertainty into the housing market, with higher-value areas seeing the sharpest slowdown.
The portal’s latest analysis shows sales agreed for £2 million-plus homes – the segment most exposed to a potential mansion tax – have fallen 135 year-on-year.
Activity has also weakened in the £500,000 to £2 million bracket, where sales agreed are down 8% amid rumours of stamp duty changes or possible capital gains tax measures.
By contrast, the mass market remains more resilient, with sales of homes priced under £500,000 falling 4% compared to last year.
BUDGET ANXIETY
Rightmove says this segment appears to be reacting more to general Budget anxiety than to specific policy leaks.
Ultra-prime homes remain a small proportion of activity overall: less than 0.5% of all sales agreed so far this year have been for properties priced above £2 million, and around 1% of homes currently for sale sit in this bracket.
Exposure to proposed annual property tax varies sharply by region. Rightmove’s data suggests almost a third (30%) of homes for sale in England are priced above £500,000, meaning they would fall within the scope of the rumoured annual property tax designed to replace stamp duty.
In London, 59% of properties listed exceed £500,000, compared with only 8% in the North East. A fifth of all agreed sales in England this year have been for homes above £500,000 – a figure that rises to 52% in London and drops to 4% in the North East.
CAPITAL GAINS TAX
Capital gains tax speculation is also shaping sentiment at the top end.
Just over 1% of sales agreed so far this year have been for homes priced above £1.5 million – the group most likely to be affected by any new capital gains tax on residential property.
The distribution again varies widely: in London, 11% of homes for sale fall into this price range, with 5% of sales agreed above £1.5 million, while the North East sits at just 0.1% of agreed sales.
“Rumours of the contents of the Budget are affecting the market.”
Colleen Babcock (main picture, inset), Rightmove’s Property Expert, says market nerves are increasingly evident: “Rumours of the contents of the Budget are affecting the market, as we’re seeing a greater hesitation in sales activity, especially at the upper end, which has been the focus of most of the discussion.
“Most are now fed up with the rumours and just want to see how their finances are going to be impacted.”
Home-movers and agents favour staggered stamp duty payments
Rightmove’s consumer research suggests widespread support for allowing stamp duty to be paid in instalments, rather than upfront in full.
Other frequently mentioned reforms include regional variations to thresholds and added protections for downsizers.
A separate poll of estate agents found strong opposition to replacing stamp duty with an annual tax levied on sellers.
Most respondents favoured either adjusting the current system or abolishing it altogether. Staggered payments were viewed more positively than shifting the liability to the seller.
Babcock adds: “We’ve been calling for stamp duty reform for some time now, as it’s a significant barrier for many people moving home.
“Making the payment more flexible, fairer regionally, and increasing the zero-rate thresholds would all be an improvement on the current set-up.”
