The housing market saw its first annual drop in new sales in two years as buyers held back, according to Zoopla’s latest House Price Index (HPI).
Uncertainty around the November Budget led many buyers to adopt a ‘wait and see’ approach.
Buyer demand dropped by 8% year-on-year and sales agreed fell by 3%.
The pre-Christmas slowdown hit 6 to 8 weeks early, made worse by a strong end to 2024 when many rushed to complete before Stamp Duty relief ended in April 2025.
There are now 7% more homes for sale than a year ago, but performance varied across regions.
Sales were up in Scotland, Yorkshire and the Humber, the South West and the West Midlands, ranging from 1% to 4% higher.
However, the South and Wales saw sharper drops, with Wales down 9%, the South East down 8%, the East of England down 6% and London down 5%.
House price growth slowed over 2025, now at 1.3%, similar to a year ago.
The average UK home now stands at £270,000, up £3,600 over the last year.
The slowdown was most notable in homes over £500,000, especially in the South.
Tax speculation, including possible changes to council tax, replacing Stamp Duty with an annual property tax, and introducing capital gains tax (CGT) on homes over £1.5m, led early-stage buyers to pause their search.
Price growth has nearly stalled in southern regions.
In contrast, it remained over 2% in Scotland, Wales and the North.
The total sales pipeline reached nearly 350,000 homes worth more than £100bn, the highest in four years.
The average time to sell is now 37 days, 10% longer than last year, and up to 45 days in London.
Richard Donnell, executive director at Zoopla, said: “The housing market is experiencing a slowdown in activity but there are still serious sellers looking to buy homes and secure their next home purchase.
“Buying a home is a lengthy process and there are a record number of homes for sale which means lots of buyers looking for their next home.
“The slowdown is modest and less severe than the impact of the 2022 mini budget.”
Donnell added: “It’s early stage buyers adopting a cautious approach to new purchases ahead of the Budget with greater caution for those buying higher value homes.
“The housing market remains on track for the most housing sales since 2022 and house prices are set to end the year 1-1.5 per cent higher than the start of 2025.”
Guy Gittins, CEO at Foxtons, said: “While the market has clearly slowed in recent weeks, much of this reflects a natural pause as buyers and sellers understandably take stock ahead of the November Budget.
“Once there is greater clarity around taxation and economic policy, we expect confidence to return quickly – particularly in London, where underlying demand remains strong and well-funded buyers are still active.
“The current slowdown should therefore be viewed as a temporary pause rather than a fundamental shift in market dynamics.”
Nathan Emerson, CEO of Propertymark, said: “While a slowdown in new sales is to be expected ahead of the Budget, many of our member agents continue to report strong levels of motivated buyers and sellers who are simply pausing for clarity rather than exiting the market altogether.
“Speculation around potential changes to Stamp Duty and Capital Gains Tax inevitably creates uncertainty, particularly at the higher end of the market, but the fundamentals remain stable.
“Employment levels are strong, mortgage rates have eased slightly, and the overall pipeline of sales remains robust.”
Emerson added: “Hopefully, the Chancellor recognises the importance of confidence and stability in the housing sector.
“Any reforms must provide long-term certainty and support for both buyers and sellers, not short-term measures that risk further hesitation.
“The UK Government has an opportunity next month to reinforce trust and momentum in the market as we head into 2026.”
