UK House Prices Surge Amidst Budget Uncertainty

According to a prominent property index, house prices in the UK have surged at the fastest rate since January 2025. This increase comes despite ongoing uncertainties in the market regarding potential tax adjustments expected in the upcoming budget.

In October, house prices climbed by 0.6% month-on-month, setting the average price of a UK home at a new record of £299,862, as reported by Halifax. This marks a notable rebound from a surprising 0.3% decline in September and surpasses the anticipated 0.1% rise predicted by a Reuters survey of economists.

On an annual basis, house prices have also risen by 1.9%, exceeding expectations of a 1.5% increase. Amanda Bryden, head of mortgages at Halifax, which is part of Lloyds Banking Group, commented, “Demand from buyers has held up well coming into autumn, despite a degree of uncertainty in the market, with the number of new mortgages being approved recently hitting its highest level so far this year.”

However, the challenge of affordability looms large, as many buyers are resorting to smaller deposits and extended loan terms to make their purchases feasible. Even though average fixed mortgage rates are currently around 4% and are expected to ease further in the months ahead, the record-high property prices can make moving feel daunting for many prospective buyers. Bryden noted, “Rising costs for everyday essentials are also squeezing disposable incomes, which affects how much people are willing or able to spend on a new property.”

The increase of 0.6% in October indicates that buyers are willing to overlook concerns regarding potential tax hikes in the budget presented by Rachel Reeves on 26 November. Earlier in August, The Guardian reported that the chancellor was contemplating a shift from stamp duty to a new levy on properties valued over £500,000.

Industry analysts predict a further uptick in home-buying activity starting in December, particularly since this year’s budget is scheduled about a month later than last year’s fiscal event. Matthew Thompson, head of sales at estate agency Chestertons, observed, “October’s property market was noticeably calmer as many buyers have paused to see what the budget might bring.” He added, “Some buyers remained active and were able to secure good opportunities, particularly where sellers were willing to negotiate. Once there is more clarity from the chancellor’s announcements, we expect buyer activity to pick up as those waiting on the sidelines re-enter the market.”

Bryden echoed this sentiment, stating, “With house prices rising more slowly than incomes for almost three years now, we expect the trend of gradually improving affordability to continue.” As the market adapts to changing conditions and buyers navigate affordability challenges, the resilience of the housing market remains evident.

The recent rise in UK house prices, despite market uncertainties and affordability challenges, signals a robust demand among buyers. With upcoming budget announcements potentially reshaping the landscape, the property market is poised for further developments. Stakeholders will be watching closely to see how these factors will influence buyer behavior and market dynamics in the months ahead.