By Professor Joe Nellis, Economic Adviser at MHA and Co-Creator of the Halifax House Price Index
The UK housing market paused for breath in September, with average property prices slipping 0.3% month-on-month amid mounting affordability challenges and anticipation of potential property tax reforms in the upcoming Autumn Budget.
Annual growth now stands at just 1.3% — a marked slowdown from the 4.6% recorded in September 2024 and the brisker pace seen across much of last year. The figures reflect a market in holding pattern as both buyers and sellers weigh the implications of possible fiscal changes and a still-demanding financial landscape.
First-Time Buyers Under Pressure
First-time buyers continue to play a pivotal role in determining market momentum, yet they face a perfect storm of high deposit requirements, elevated mortgage rates, and persistent cost-of-living pressures. Their hesitation is compounded by uncertainty over how the Treasury’s next moves could reshape property taxation.
Stamp Duty Reform Could Unlock Activity
Speculation is growing that the Chancellor may introduce reforms to stamp duty land tax (SDLT) — potentially allowing payments to be spread across several years rather than upfront. Such a move could significantly ease cash flow pressures, freeing up capital for deposits, moving expenses, and home improvements, while offering long-awaited support to those struggling to step onto the property ladder.
Signs of Relief — But Recovery Will Be Slow
Recent falls in fixed-rate mortgage deals, with some now dipping below 4%, have offered a glimmer of relief. However, borrowing remains challenging, and overall affordability constraints are likely to limit any rapid resurgence in demand.
Market analysts expect modest price growth through the remainder of 2025, with more meaningful recovery possible in 2026 — contingent on inflation continuing to cool and mortgage rates edging lower. Still, with household budgets stretched and policy uncertainty high, the months ahead will be critical in determining whether the market stabilises into a soft landing or cools further.
Pressure on the Chancellor
For the Treasury, weaker price growth and a slowdown in transaction volumes translate into smaller stamp duty receipts — narrowing fiscal headroom ahead of key spending commitments. The Chancellor’s choices on 26 November will therefore be closely watched across the industry, as stakeholders await measures that could reinvigorate activity and restore confidence to the UK housing market.
