Budget damage to housing market set to continue, experts warn
The UK’s housing market will continue to suffer from the impact of months of budget speculation last year as seller confidence languishes, property experts have warned.
While sellers and estate agents breathed a sigh of relief when November’s Budget steered clear of most of the property that had been feared, these experts told Morning Wire the market is unlikely to bounce back in 2026.
Although this week’s rock-bottom London house prices have been blamed on speculation around the Budget, property analysts fear this is the first effect – not the last – of a lengthy hangover caused by the briefing around the fiscal statement.
Chancellor Rachel Reeves introduced a council tax surcharge on homes worth more than £2m but other rumoured measures – including reforms to capital gains tax and further changes to council tax – failed to materialise.
Sellers lack confidence
Tom Bill, head of UK residential research at Knight Frank, told Morning Wire the post-Budget relief felt by the property market will not cause a significant or sustained boost in selling activity or house prices.
Bill said: “The prevailing mood now is relief as the tax speculation fades, which has supported activity in the early weeks of 2026. However, the market is far from firing on all cylinders.
“We expect low single-digit UK house price growth this year, primarily based on lower mortgage rates.”
In the four weeks between the end of November and beginning of December buyer demand, new housing supply and the number of sales agreed all fell year on year by twelve, eight and nine per cent respectively, according to Zoopla’s house price index.
David Fell, senior analyst at luxury estate agency Hamptons, told Morning Wire: “Even after the budget, prime markets remain tentative. Would-be sellers of more expensive homes typically waited for clarity before coming on to the market.
“While this has pushed up average asking prices being reported early this year, the values being achieved are typically similar or slightly down on where they were last year.”
Current house price growth is based on values agreed in the middle of 2025, before Budget speculation kicked in, meaning the full effect of this is yet to rear its head, he said.
Luxury property market will slow
Lucian Cook, head of residential research at Savills, said the top end of the market in particular will remain price sensitive in 2026, despite a better than feared Budget.
He said: “This year we expect house price growth to remain in low single-digit territory, despite improving affordability.
“While interest rates are expected to edge down, weak economic growth is likely to act as a drag on buyer confidence, with a weak labour market limiting the capacity for growth.”
Last week, data from Hamptons revealed that most of the London areas where house-selling was least profitable in 2025 were its most upmarket – Chelsea and Kensington, Camden, and Hammersmith and Fulham.
HM Treasury has been contacted for comment.