Budget Uncertainty Creates North-South House Price Divide
Britain's property market is experiencing a dramatic regional split, with house prices falling across London and southern England while continuing to rise in more affordable northern areas and Wales. According to the latest data from property portal Zoopla, this marks the first annual price decline in southern regions in 18 months.
Speculation around potential property tax changes in the run-up to the recent Budget created significant uncertainty across the housing market. Buyer demand fell by 12% in the four weeks leading to November 23 compared with the same period last year, while agreed sales also decreased.
Regional Variations Show Clear Pattern
The data reveals a stark contrast between different parts of the country. In October, London recorded a 0.1% annual price fall, matching the decline seen in the South East. The South West experienced a slightly larger decrease of 0.2%.
Meanwhile, more affordable regions continued to see solid growth. The North West led the way with prices rising close to 3% annually, while the rest of northern England, Scotland and Wales recorded increases of 2-3%.
Across the UK as a whole, the average house price increased by 1.3% annually in October to reach £270,200, demonstrating how regional variations are balancing out the national picture.
Budget Impact and Market Response
The government's eventual Budget measures proved less severe than many homeowners had feared. Rather than implementing a new annual property tax on homes valued over £500,000 as had been speculated, the government announced a high-value council tax surcharge affecting only the most expensive properties.
Starting from April 2028, this surcharge will apply to English homes valued above £2 million, with four price bands ranging from £2,500 annually for properties over £2 million to £7,500 for those exceeding £5 million. The government estimates this will affect fewer than 1% of UK properties but raise over £400 million in 2029-30.
Richard Donnell, executive director at Zoopla, commented: "The Budget bark was worse than the Budget bite for the housing market. Home buyers and sellers will welcome the end of the uncertainty that has stalled housing market activity since the late summer."
The report noted that the usual Christmas slowdown has started earlier than usual, but committed buyers are still pushing to secure deals before year-end, with sales agreed only 4% lower than last year despite the 12% drop in demand.
Future Outlook for 2026
Zoopla predicts that the absence of more widespread property taxes should provide welcome relief to the market, potentially boosting activity at the start of 2026. Sellers in southern England, where there are higher concentrations of homes valued at half a million pounds or more, are expected to see the biggest benefit.
However, the website cautioned that a high supply of homes on the market will likely keep prices in check, particularly in southern regions where price growth may remain static in the short term.
David Powell, CEO of Andrews estate agent, added: "I expect the market to bounce back from any damage caused by leaked or shelved policies leading up to the Government's Budget and we will see activity levels increase across the South throughout 2026."
With greater certainty following the Budget announcements, Zoopla anticipates a rebound in housing market activity building into the new year as households who paused moving decisions in recent months return with increased confidence.
