Property prices in London and the South fell for the first time in 18 months in October, new data shows. 

While Britain waited for Rachel Reeves' Budget, property prices in some of England's most expensive locations fell amid mounting uncertainty. 

The impact of fiscal drag also continues to mount as Reeves left stamp duty rates as they are. 

Budget speculation has cooled buyer demand and 'slowed market activity' since the summer, leading to the first fall in house prices across southern England in 18 months, Zoopla said in its House Price Index.  

Rumours of a new tax on homes over £500,000 in the run up to the Budget fuelled uncertainty across the housing market, leading to a 12 per cent drop in buyer demand and fewer sales agreed in the four weeks to 23 November compared to a year ago. 

Average house prices in London, where the average cost of a home is £530,000, the South East and South West slipped 0.1 per cent, 0.1 per cent and 0.2 per cent respectively year-on-year in October.   

Speculation about new taxes on higher-value homes, over £500,000, hit southern England, where more than a third of homes for sale are priced above this level, hardest.

'Increased uncertainty, combined with wider market factors, has pushed prices lower', Zoopla said. 

The online property portal also said the number of homes for sale in southern regions was between eight to 15 per cent higher than a year ago. 

David Powell, chief executive of Andrews Estate Agents, said: 'I suspect house price growth in the South may remain static in the short term whilst the market adjusts to the new normal.'

Reprieve from tax grab on £500k-plus homes 

Many homeowners breathed a sigh of relief on Wednesday after Reeves did not announce a new annual property tax on homes purchased for over £500,000.   

More than 210,000 homes are listed for sale above this £500,000 level, comprising around a quarter of all sales listings in Britain. These homes are mostly concentrated in southern England and account for half of all homes for sale in London. 

'Removing the threat of a new annual property tax from 210,000 homes for sale will help revive market activity in higher-value areas', Richard Donnell, executive director at Zoopla said.  

Property prices rising in northern England

While property prices in London and southern England fell during the prolonged wait for Reeves' Budget, prices in locations known to be more affordable continued to rise. 

'House prices in lower value, more affordable areas continue to increase', Zoopla said.  

In the north west and north east of England, average property prices rose by 2.9 and 2.3 per cent respectively in October. 

In the city of Liverpool, average house prices increased by 3.3 per cent year-on-year. Meanwhile, in the west Midlands, property prices jumped 2 per cent year-on-year. 

Belfast has seen a hefty 7.8 per cent increase in average property prices year-on-year, with the average cost of a home in the city rising to £195,500. 

In the northern cities of Manchester and Newcastle, average house prices increased by 2.4 per cent to £234,500 and £160,900 respectively. 

Most regions and counties outside the south of England are registering above average price inflation, Zoopla said.  

Impact of no stamp duty reform

In a bid to fund Labour's benefits splurge, Reeves announced a new mansion tax during the Budget on Wednesday.  

From April 2028, owners of homes in England valued at £2million or over in 2026 will be required to pay an annual high-value council tax surcharge on top of existing council tax.

The value of qualifying properties will not be based on asking or sale prices, but will instead be determined in 2026 by the Labour's Valuation Office Agency.

There will be four price bands, meaning the surcharge will rise from £2,500 a year for properties valued at between £2million and £2.5million, to £7,500 a year for those valued in the highest band of £5million and above.

But there was silence from Reeves on a major issue affecting the fluency and vitality of the property market - stamp duty. 

Stamp duty thresholds for main residence purchases in England and Northern Ireland were last set in 2014. 

However, house prices have risen 47 per cent since, according to Zoopla, pulling more buyers into paying stamp duty and increasing the share of the purchase price paid in stamp duty. 

In locations where stamp duty costs relative to the purchase price are higher, stamp duty burdens weigh on household mobility and influences what price buyers are willing to offer for property, hitting price inflation, Zoopla said 

Among existing homeowners, who receive no reliefs, more than 90 per cent of buyers across southern England and the Midlands pay stamp duty, with the costs rising the most where home values are highest. 

Zoopla said: 'Buyers of average-priced homes in many southern towns are now paying 3 per cent or more in stamp duty - for example, £9,500 (2.5 per cent) in Aldershot and £10,650 (2.6 per cent) in Crawley. 

'The case for the abolition of stamp duty as part of wider tax reforms remains strong.'

What's next for property prices?

As households digest Reeves' latest tax-grabbing Budget, Zoopla said it remained upbeat about the sector's prospects. 

It said: 'Our data shows the underlying demand to move home remains strong. 

'With greater certainty, we expect a rebound in housing market activity that builds into the new year, with households who paused homemoving decisions over recent months return with greater confidence.' 

Zoopla said it expected the variance in price inflation between the south of England and the rest of the country to remain, adding that income growth was key to helping reset housing affordability and sparking more home moves. 

Following the Budget, Nationwide and Virgin Money announced they were cutting selected mortgage rates. 

From today, Nationwide is reducing selected fixed rates by up to 0.19 per cent. 

This includes rates across its First Time Buyer, Home Mover, Existing Customers Moving Home and Remortgage products, as well as its Switcher and Additional Borrowing ranges.

Virgin Money said it was trimming selected mortgage rates, also by up to 0.19 per cent.  

Jack Tutton, a director at Fareham-based SJ Mortgages, told Newspage: 'Nationwide and Virgin are first out of the blocks to make changes to their rates following yesterday's Budget. 

'After a day of increases in taxes and less money in our pockets down the line, these lenders have continued the trend that we have seen more recently by making further reductions to the rates that they offer.

'Both lenders have made significant reductions to try and help all forms of mortgage holders, from first-time buyers through to existing customers, making sure that everyone can benefit from the reductions on offer.'