Buyer demand and new listings for homes priced over £500,000 dropped by 4% and 7% in the last year as more buyers waited for the November Budget, Zoopla’s House Price Index found.
Demand for homes over £1m fell by 11% while new listings were down 9%.
In contrast, mainstream market activity stayed much steadier.
House price growth slowed from 1.9% in December 2024 to 1.4% in August 2025.
The average UK home was valued at £271,000, up £4,350 in the last year.
London, the South East, South West, and East of England saw the lowest house price growth, less than 0.5%, due to affordability issues and higher Stamp Duty.
These difficulties were less of a problem in other regions, with Northern Ireland leading with a 7.9% rise and the North West up 3.1%.
Estate agents had an average of 36 homes for sale, a 20% jump from 2023 and up 8% year-on-year.
Sales agreed were up 3% as buyers tried to take advantage of the autumn market.
However, speculation about higher property taxes was putting the brakes on higher-value sales, especially in London and the South East.
One in three homes for sale were priced over £500,000 and 8% over £1m.
House prices were rising fastest in more affordable regions, up 2.8% in areas where homes cost less than £200,000.
Locations such as Kirkcaldy, Oldham, Tweeddale, Motherwell, Llandrindod Wells and parts of Northern Ireland saw gains above 4%.
Meanwhile, prices fell by 1% in parts of southern England, including Bournemouth, Truro, Exeter and Torquay, as well as central London.
Higher council tax on second homes was resulting in more homes being listed for sale in some of these areas, affecting price growth.
Average mortgage rates on new 5-year fixed deals were between 4% and 5%.
Buyers could afford to borrow 20% more than six months ago on the same income, which helped demand, especially among first-time buyers and in cheaper regions.
Richard Donnell, executive director at Zoopla, said: “The housing market has experienced a sustained increase in market activity over the last 18 months as mortgage rates have stabilised.
“The market is on track for the most sales since 2022, but without rapid house price inflation.
“Pre Budget speculation over possible tax change is a regular occurrence but this summer it has been bigger than usual which has led some buyers and sellers to delay home moving decisions for homes priced over £500,000. The wider market remains largely unaffected.”
Donnell added: “Serious buyers should think twice before delaying as while the Budget is two months away it takes, on average, six to seven months to find a property and complete a sale.”
Kevin Shaw, national sales managing director at LRG, said: “The housing market has shifted in favour of buyers, with sellers increasingly willing to align with agents’ valuations and to negotiate on price.
“That balance is welcome for many purchasers, particularly first time buyers who appear undeterred by April’s increase in Stamp Duty and have benefitted from lower interest rates.
“At the upper end of the market, speculation over property tax has created hesitation.
“The prospect of a so-called mansion tax, combined with wider fiscal uncertainty, has dented sentiment and slowed decision-making somewhat.”
Shaw added: “Other aspects of Zoopla’s research reflect the broader political and economic picture – specifically the reversal of pandemic-driven coastal demand, together with an increase in council tax on second homes in the South West, and a reduction in the number of non-doms impacting demand for second homes in central London.
“Yet price growth in more affordable regions – to which we would add the East Midlands and parts of the North West – demonstrates that much of the market remains buoyant.
“While tax speculation may leave 2025 relatively flat overall, the fundamentals are stable. A stronger spring market should emerge once fiscal policy is clarified and confidence returns.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “Yet another housing market survey hot-on-the-heels of others recently confirming property prices are softening.
“In our offices, we’re hearing time and again how concerns about possible tax increases in the Budget – particularly for high-end homes – are prompting buyers and sellers to ‘sit on their hands’, though our existing sales are certainly not collapsing.
“Demand remains relatively healthy for more affordable homes but is slowing in parts of the market which were already under performing.”
Nathan Emerson, CEO of Propertymark, said: “A slowing in house price growth will be welcome news for those serious about moving home, especially first-time buyers.
“However, there are underlying factors affecting affordability and confidence, such as economic uncertainty and inflation, making people cautious about their finances, and stagnating income and wage growth.
“Recent changes to Stamp Duty across England and Northern Ireland have also reduced buyer affordability, and rumours of further alterations are bound to create some uncertainty.”
Emerson added: “For some, however, especially current homeowners, a slow tapering in interest rates has allowed lenders to introduce more competitive mortgage products and has decreased the monthly cost for those with variable or tracker mortgages, allowing them to refinance to lower rates.
“We now look to the Bank of England’s next interest rate announcement in November and hope to see positive introductions through the UK Government’s Budget that will help ease affordability pressures for buyers looking to step onto or move up and down the housing ladder.”
