Average house prices declined in September and slowed on a yearly basis as Budget uncertainty hampers the housing market, Office for National Statistics (ONS) data shows.
The latest ONS House Price Index, based on Land Registry data, shows average property values fell by 0.6% between August and September, the first drop since April 2025.
Annual price growth was 2.6%, down from 3.1% in August.
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This puts average UK house prices at £271,531.
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Richard Donnell, executive director of research at property website Zoopla, blamed uncertainty ahead of the Budget and affordability pressures.
He said: "Pre-Budget jitters are hitting housing market activity at the start of the home buying process. Demand and sales agreed for homes priced over £500,000 are down by up to 9% on this time last year as buyers pause home buying decisions.
"There are 350,000 homes where the sale has been agreed moving towards completion and some buyers of expensive homes will be nervous about possible changes to council tax for their new purchases.”
While the Land Registry figures are dated, Jason Tebb, president of property website OnTheMarket, said they suggest that there is some caution and price sensitivity in the market.
He said: “With the Budget imminent, we urge policymakers to focus on stability, assisting confidence and supporting the housing market, which is so vital to the wider economy.”
What is happening with UK house prices?
Many analysts say the housing market has been on pause in recent months amid rumours of tax changes in the Budget which could alter property taxes.
Lower stamp duty thresholds since April have already deterred some buyers and now whispers about stamp duty changes and even a mansion tax in the Budget appear to have caused more hesitation, hitting demand and pushing average prices down.
Average house prices in the 12 months to September 2025 increased in England by 2%, in Wales by 2.7% and by 5.3% in Scotland.
Northern Ireland recorded a 7.1% annual rise between July and September 2025.
Of the English regions, annual house price growth was highest in the Yorkshire and The Humber, where prices increased by 4.5%.
London was the English region with the lowest annual inflation, where prices decreased by 1.8% in the 12 months to September 2025.
Simon Gerrard, chairman of Martyn Gerrard Estate Agents, blamed the drop in London house prices on poor government messaging on Budget changes.
He said: “Another week brings another turn of the rumour mill. Now we’re hearing the government has abandoned plans to raise income tax and will try to tax high-value properties instead. This was mooted in the summer and swiftly dropped after the lunacy of the idea became quickly apparent.
“These measures will distort the entire housing market, hurt upward mobility and won’t raise the money hoped for. Second steppers are already struggling to move up the ladder, and this will exacerbate these issues. Gumming up the property market lowers transactions and only hurts government revenues.
“This tax will overwhelmingly hit families in London. Let’s call it what it is, this is a London tax. It’s nigh on impossible to start a family in the capital and this will ensure that remains the case for many years to come.”
Will house prices rise in 2025?
Average house price data can be distorting as no-one really lives in a typical house and there are variations by region and the type of property.
But most analysts agree the direction of travel for house prices is slower.
Some have even revised their forecasts, with estate agency Knight Frank now predicting that average UK mainstream prices will rise by 1% in 2025, down from a previous figure of 3.5% in May.
Zoopla is predicting that average UK house prices will rise by an average of 1% to 1.5%.
Donnell added: “The last house price index data shows a slowdown in house price and rental inflation as affordability pressures bite. This slowdown is expected to continue into 2026. More first-time buyers and lower migration for work and study is easing the pressure on rents, with rents for new lets rising at their lowest level for four years.
"All eyes are now on next week's Budget – if the housing market gets off lightly then we expect a rebound in demand and activity, but if the impact on consumer confidence is greater, then we could have a sluggish start to 2026.”
While headline growth has softened in England, Jonathan Handford, managing director of Fine & Country, added that stronger rises in Wales, Scotland and Northern Ireland show a market that is far from uniform.
He said: “Activity is being driven by serious, needs-based movers, and September’s transaction levels, up 4% year on year, underline that momentum.
“Yes, uncertainty around the Autumn Budget is causing some hesitation, especially at the top end where tax changes are a concern, but the fundamentals remain encouraging.
“More stock, steady demand and improving real incomes are contributing to a more balanced market. Provided the economic backdrop continues to stabilise, we expect a modest but sustained pace of activity as we head into 2026.”
