Budget uncertainty and a glut of supply caused house prices in London and the south to record an annual for the first time since last spring, according to new data.
London house prices fell 0.1 per cent year on year, while prices in the south east and the south west fell by 0.1 per cent 0.2 per cent, respectively, according to Zoopla.
The property platform found that “Budget speculation around property taxes has contributed to a drop in home buyer demand and sales agreed”.
Rumours of an annual property tax on homes worth more than £500,000 were particularly destabilising for the London market, where over 51 per cent of houses would have been affected.
“The Budget bark was worse than the Budget bite for the housing market,” Richard Donnell, executive director at Zoopla, said.
“Home buyers and sellers will welcome the end of the uncertainty that has stalled housing market activity since the late summer. Our data shows the underlying demand to move home remains strong.”
Tom Bill, head of UK residential research at Knight Frank, added that the increased certainty post-budget will “allow demand to bounce back following months of speculation”.
Questions around mansion tax
Instead of an annual tax, the Treasury will implement a council tax surcharge on homes over £2m.
While there has been relief that the tax is lighter than expected, analysts have still voiced concerns that it will affect middle-class Londoners who have seen the value of their homes skyrocket over the last two decades.
“Until it is introduced in 2028, buyers and sellers face uncertainty around price thresholds and even once valuations are completed, they could be challenged, which would prolong the limbo,” Bill said.
“Over time, more properties will get dragged into the mansion tax net, which means the proportion of terraced houses, flats and semi-detached homes will grow, particularly in the capital,” he added.