UK House Price Growth Slows as Buyers Exercise Caution Ahead of Autumn Budget

Published: 07 October 2025. The English Chronicle Desk

The UK housing market is showing signs of cooling as house price growth slowed to 1.3% in the year leading up to September, according to the latest data from Halifax. This represents the weakest annual increase since April 2024 and falls significantly short of predictions made by economists, who had anticipated a growth rate of 2.2%, up from August’s 2%. The figures suggest that buyers are adopting a more cautious approach in the run-up to the forthcoming autumn budget.

On a monthly basis, the average price of a typical home fell by 0.3%, equating to a reduction of £794, bringing the overall figure to £298,184. This decline reversed a modest 0.2% increase recorded in August, signaling a potential plateau in market momentum. First-time buyers, however, experienced slightly better conditions, with the typical property for a first-time buyer rising by 1.7% year-on-year to £236,811. Regional disparities continue to provide pockets of relative affordability, allowing some buyers to find properties at lower-than-average prices in certain areas.

Amanda Bryden, head of mortgages at Halifax, noted that while affordability challenges remain a persistent issue, a combination of relatively lower mortgage rates and steady wage growth has helped sustain buyer confidence in the market. She emphasized that despite ongoing economic uncertainties, modest house price growth is still expected throughout the remainder of the year.

“While the broader economic outlook remains somewhat unpredictable, the current environment is offering support for buyers, particularly those benefiting from wage increases and favourable mortgage deals,” Bryden said. “This means that although growth is slowing, the market is far from stagnant.”

Sarah Coles, head of personal finance at the investment platform Hargreaves Lansdown, observed that buyer enthusiasm appeared to have softened during September, resulting in a slight decrease in average house prices following August’s record highs. She characterized the market as stable rather than in decline, highlighting that mortgage rates continue to provide relatively favourable conditions for prospective buyers. The average two-year fixed-rate mortgage deal remains below 5%, while the average five-year fixed-rate option is only slightly higher, offering buyers some financial breathing room despite broader economic pressures.

The Bank of England has left interest rates unchanged at 4% as of last month, following a series of five reductions since the previous summer. The central bank’s governor, Andrew Bailey, has urged caution, citing persistent inflation, which reached 3.8% in August. This figure is nearly double the Bank of England’s target rate and has been driven in part by rising food prices, further complicating affordability for many households.

The market’s current cautious tone also appears to be influenced by the approaching autumn budget, set for 26 November, which has created uncertainty among potential buyers. Reports suggest that Chancellor Rachel Reeves is considering replacing the current stamp duty regime with a new levy targeting property sales above £500,000. Such a move could significantly affect the decision-making process for prospective homeowners, particularly in the upper segments of the market, and may be contributing to the observed slowdown in buyer activity.

Economists have pointed out that this period of slower growth should not necessarily be viewed as a sign of a housing market crash, but rather as a temporary cooling period amid ongoing policy changes and economic adjustments. The relatively restrained pace of price growth may reflect buyers’ hesitation to commit to purchases until they have greater clarity on taxation and potential regulatory changes.

Halifax’s findings suggest that the market is experiencing a delicate balance between affordability and demand. On the one hand, buyers are still encouraged by relatively stable mortgage rates and the potential for modest wage growth. On the other hand, rising costs of living, persistent inflation, and possible changes to property taxation are prompting more cautious purchasing behaviour.

Regional trends continue to vary, with some areas exhibiting stronger resilience in house prices than others. While first-time buyers may find opportunities in specific regions offering more affordable housing options, established homeowners in higher-value areas may face greater uncertainty due to potential adjustments in stamp duty rules and property taxes. Analysts note that the housing market is heavily influenced by both economic and political factors, and the coming weeks will likely be critical in shaping market behaviour ahead of the budget announcement.

In addition to affordability concerns, supply and demand dynamics remain a key factor in the housing market. Despite slowing growth, demand for homes in many urban areas continues to outstrip supply, maintaining upward pressure on prices in certain segments. Developers and estate agents have reported steady interest from buyers, although many are adopting a “wait and see” approach pending further economic guidance and clarity on government policy measures.

The combination of steady interest rates, wage growth, and selective affordability is contributing to a nuanced market environment. While the overall annual increase of 1.3% suggests a slowdown, it is important to recognize that this figure reflects a complex interplay of factors, including regional variation, buyer sentiment, and broader economic pressures. The market is not experiencing dramatic declines, but rather a period of adjustment as households navigate financial constraints and uncertainties related to taxation and policy developments.

Industry observers highlight that the current cooling in house prices may also have broader implications for the economy. The housing market is closely tied to consumer confidence, household wealth, and spending patterns. Slower growth in house prices may influence household decisions regarding consumption, investment, and borrowing, potentially affecting other sectors of the economy.

Overall, the UK housing market is entering a phase of cautious optimism. While growth has slowed, the market continues to provide opportunities for buyers, particularly those who are able to take advantage of lower mortgage rates and targeted regional affordability. The coming autumn budget will play a pivotal role in shaping the trajectory of the market, as potential policy changes, including the possible replacement of stamp duty with a new levy, will influence buyer sentiment and purchasing behaviour.

In summary, the latest Halifax data underscores a more measured pace of house price growth in the UK, reflecting both economic pressures and cautious buyer sentiment. The market remains resilient, with affordability, mortgage rates, and regional opportunities continuing to support prospective homeowners. Nevertheless, the impending budget announcement is likely to dominate buyer decision-making in the coming months, with market participants closely monitoring policy developments and their potential impact on the housing sector.