Speculation ahead of the Autumn Budget is beginning to affect the higher end of the housing market, particularly homes priced over £500,000. For the wider market, however, activity continues steadily, with modest growth in prices and stable demand.

At a glance

• House price inflation running at 1.4% year-on-year to August 2025.
• Pre-Budget tax speculation is dampening demand for homes above £500,000, with demand down 11% for properties over £1 million.
• Price growth strongest in more affordable areas, up to 2.8%.
• Mortgage rates holding between 4% and 5%, supporting demand but unlikely to fall soon.
• The north–south divide in activity continues, with weaker growth in southern England and stronger gains across the rest of the UK.
• Market activity may plateau in the weeks ahead, but motivated buyers and sellers should remain focused on their plans.

Average UK house prices

The average UK house price stood at £271,000 in August 2025 (published September 2025). That’s £3,870 higher than a year ago, equating to annual growth of 1.4%.

By property type (August 2025):

• Flats/maisonettes: £192,000 (down £1,230 year-on-year, -0.6%)
• Terraced houses: £240,200 (up £4,980, +2.1%)
• Semi-detached houses: £277,500 (up £7,090, +2.6%)
• Detached houses: £452,300 (up £6,850, +1.5%)

Budget speculation dampening demand

Over the past two years, the market has seen steady recovery, with the average agent now listing 36 homes, up 20% on 2023. Sales have been rising as determined buyers look to move this autumn.

But recent talk of potential property tax reform has started to unsettle higher-value buyers and sellers. Demand for homes over £1 million has dropped 11% compared with last year, while properties over £500,000 have seen demand fall 4%. Supply is also slowing, with 9% fewer £1m+ homes and 7% fewer £500,000+ homes listed for sale.

The uncertainty stems from reports of proposals such as replacing stamp duty with an annual property tax on homes over £500,000, council tax revaluations, and even capital gains tax on sales above £1.5m. Although not official government policy, these options have already had an impact.

London and the South East, where higher-value homes make up a larger share of the market, are likely to feel the effects most strongly in the months ahead.

Price growth slows to 1.4%

UK house prices in August were 1.4% higher than a year ago, compared with 1.9% growth in December 2024. Southern England remains weakest, with growth of less than 0.5% across London, the South East, South West and East of England.

Mortgage rates steady at 4–5%

Mortgage markets have stabilised. Five-year fixed deals are currently available between 4% and 5%, depending on loan size. While many had expected faster falls in base rates, this has not materialised.

Even so, affordability changes earlier this year mean buyers can now borrow around 20% more than six months ago on the same income and mortgage rate. This shift has boosted activity among first-time buyers and those in more affordable regions.

What’s next for the market?

Market activity has grown steadily for 18 months but is expected to level off in the weeks ahead, largely due to Budget uncertainty. The speculation is concentrated on higher-value homes, while demand in the mainstream market remains resilient.

The strongest growth will continue to be in more affordable areas, underlining the widening north–south divide. For serious buyers and sellers, waiting for clarity may cause delays, given that the average transaction still takes six to seven months from offer to completion.