Housing sector showing exceptional resilience prior to upcoming Autumn Budget
The real estate market in England and the UK as a whole is showing a mixed picture, according to the latest figures from the Office for National Statistics (ONS).
The average home price in England stands at £292,000, marking an increase of 2.7% from the previous year. However, this growth is not uniform across the regions. London, for instance, is experiencing the lowest annual home price inflation at 0.7%, a decrease from 0.9% in the 12 months to June 2025.
Jonathan Hopper, CEO of Garrington Property Finders, observes a two-speed market emerging. On the one hand, those who need to move are negotiating hard to de-risk themselves from potential tax changes. On the other hand, discretionary movers are adopting a wait-and-see stance, using the uncertainty as an excuse to pause.
This hesitancy could be due to the uncertainty surrounding property taxes, with the UK government expected to outline details in the Autumn Budget 2025, scheduled for November 26, 2025. Higher-than-expected inflation, currently at 3.8%, fueled by high food and services costs, is also introducing additional risk to housing demand, according to Barratt Redrow.
Despite these challenges, the market is demonstrating resilience, assisted by five interest rate reductions in the past year. Marc von Grundherr, Director of Benham and Reeves, notes that even marginal percentage increases in London translate into significant sums for sellers.
London's home price to earnings ratio of 8.22 makes it one of the least affordable places to live in the country. However, the capital's home sellers may see a more muted performance, but London's status as the nation's most resilient real estate market is underscored by this continued growth.
Elsewhere in the UK, the story is different. The average home price in Wales is £209,000, an increase of 2% from the previous year, while in Scotland, it stands at £192,000, an increase of 3.3% from the previous year. The national home price to earnings ratio is 6.55.
Danni Hewson, head of financial analysis at AJ Bell, expects prices to keep rising in the near term. However, real estate analysts predict a slowdown in buying activity as Brits hold off on purchases, waiting to see what property taxes or relief the Autumn Budget might hold. Markets are hedging their bets on the potential for one final interest rate cut in 2025.
In conclusion, while the real estate market in England and the UK is showing signs of resilience, there is a clear divide between the hotspots and the cooler areas. The upcoming Autumn Budget is expected to provide some clarity on property taxes, which could potentially influence buying decisions. Until then, the market remains uncertain, with buyers and sellers adopting a cautious approach.
