Zoopla: House prices in southern England drop for first time in 18 months

House prices in southern England dropped for the first time in 18 months due to Budget fears and greater stock on the market.

Prices in London, South East and South West England fell in the year to November by up to 0.2%, Zoopla’s latest House Price Index shows.

In the pre Budget rumours, it was widely speculated that chancellor Rachel Reeves would announce a new annual tax on homes valued at over £500,000 in the Budget, and while no such announcement was made, it has ultimately led to prices sliding in some regions.

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Speculation that a property tax could be introduced was one of the main causes for the fall in house prices in southern England, Zoopla said, as buyers held off to see what was confirmed.

Zoopla said there were 12% fewer sales agreed in the four weeks to 23 November compared to last year, which put downward pressure on prices.

Property prices in all other regions of Britain remained more stable, however, all showing house price growth in the year to November.

Prices grew the most in the North West of England (2.9%), then Scotland (2.7%) and North East England. Prices across England, Wales and Scotland went up by 1.3%.

It means the average house price across UK now stands at £270,200.

The elimination of the threat of extra taxes will lead to an increase in buyer demand at the start of 2026, Zoopla said, with sellers in southern England set to see the biggest boost.

The proportion of homes currently on sale for over £500,000 in London is 51% and 34% in South East England, compared to an average of 24% across the UK.

Richard Donnell, executive director at Zoopla, said the “Budget bark was worse than the Budget bite” for the housing market.

“Our data shows the underlying demand to move home remains strong. With greater certainty we expect a rebound in housing market activity that builds into the new year with households who paused home moving decisions over recent months return with greater confidence.”

Stamp duty ‘fiscal drag’

Zoopla said frozen stamp duty thresholds were leading to a “fiscal drag” effect wherein rising house prices mean buyers are increasingly having to pay higher amounts.

Some experts, including property advice website Homeowners Alliance, have called for the thresholds to rise in line with house prices.

People buying their second home currently pay no stamp duty on the first £125,000 of a home, 2% on the portion from £125,001 to £250,000 and 5% on the amount between £250,001 and £925,000.

First-time buyers pay no stamp duty on the first £300,000 portion of a property, then 5% on the portion from £300,001 to £500,000.

Zoopla said the number of homes bought by existing homeowners where the cost of stamp duty is more than 2.5% of the house price has jumped from 21% to 33% since 2019.

Should you buy or sell in the run up to Christmas?

Knowing when is the best time to buy a home is the golden ticket, but there are no set rules.

Spring is generally considered the best time to buy a house, as more homes are expected to be on the market, but this isn’t always the case.

Paula Higgins, founder and chief executive of property advice website HomeOwners Alliance, said buyers could get a good price in the run up to the new year due to sellers holding off pre-Budget and pent-up demand yet to kick in meaning competition is low.

“Sellers who’ve been on the market for weeks are far more open to negotiation. This is usually the case in a normal year, but even more so this year with so much speculation around the Budget and it being so late in the year. Move now and you could bag a bargain before everyone rushes back into the market in January.”

The same sentiment goes for sellers though, Higgins said. Those getting their house on the market now could beat others waiting to list in the new year.

“If you’re going to list, get your photos done before the Christmas decorations go up - otherwise your home will look dated come January.”