Housing market slows amid fears Reeves will increase property taxes | Property

The UK housing market is showing signs of slowing amid speculation that Rachel Reeves could announce property tax increases in next month’s budget.

In a sign of growing caution among house hunters, figures from Rightmove showed that both the number of new buyers contacting estate agents about homes for sale and the number of new sellers coming to the market fell by 5% in September compared to the same month the previous year.

The website said the market remained “resilient” but warned that the typical post-summer bounce in activity had not occurred.

“Speculation that the budget could increase the cost of buying or owning a property at the top end of the market has given some movers, particularly in the south of England, reason to wait and see what is announced in the budget,” Rightmove property expert Colleen Babcock said.

In an interview with the Guardian last week, Reeves signaled that those with the “broadest shoulders” should pay their “fair share” of taxes and promised new measures to fight inflation as he prepares next month’s tight budget.

The Treasury has explored a new tax on the sale of homes worth over £500,000 and the removal of the capital gains tax exemption on main homes worth over £1.5 million as ways to raise the government’s revenue.

The introduction of a new council tax band for high-value properties in England could also be considered as the Chancellor faces pressure from Labor MPs to overhaul property taxes in next month’s budget.

The average price of properties listed for sale rose by 0.3%, or £1,165, to £371,422 in October, according to Rightmove’s latest snapshot. It was stated that this increase was below the 10-year average of 1.1%, which was the average increase in October.

Rightmove said some of the recent slowdown in activity could be attributed to a strong September in 2024, which was supported by the Bank of England’s first interest rate cut in four years and set a high benchmark for annual comparison.

But property experts said buyers, sellers and high street lenders were “pausing” ahead of the budget. “[There are] Rightmove said there remained some concerns about what the upcoming budget might contain.

Tom Bill, Knight Frank’s head of UK housing research, said: “Transaction figures over the last six months have been supported by stable mortgage rates and softer prices as sellers begin to accept the fact that high supply levels mean this is a buyers’ market.

“However, demand is fluctuating for the second year in a row as the fall market begins as budget speculation turns into a prolonged and frustrating game of ‘guessing the tax increase’.”

A Treasury spokesman said: “We are taking action to ensure England builds more new homes, including strengthening call-out powers, removing burdensome regulations and getting planning permissions into the ground faster with AI.

“The budget will strike the right balance between making sure we have enough money to fund our public services and ensuring we can deliver growth to raise living standards.”