According to Zoopla’s latest house price index, home values across London fell by 0.1 per cent year-on-year to £530,000 as of the end of October.
Similar declines were recorded in the South East of England, where values dropped 0.1 per cent to £383,100, and in the South West, where they fell by 0.2 per cent to £311,200.
This regional decline contrasts with the national picture, which saw average UK house prices rise by 1.3 per cent year-on-year.
Most regions outside the South registered above-average house price inflation, with the North West experiencing a 2.9 per cent increase from a year ago.
Zoopla attributed the southern decline to uncertainty in the run-up to the autumn budget, particularly due to rumours of a new annual property tax on homes worth over £500,000.
This speculation led to a 12 per cent drop in buyer demand and fewer sales in the four weeks leading up to November 23.
The anticipated property tax did not materialise in the budget.
Instead, Chancellor Rachel Reeves announced a new “high value” council tax surcharge on properties worth over £2 million, commonly referred to as a “mansion tax.”
This development has provided relief to owners of the 210,000 properties for sale across the UK valued between £500,000 and £2 million, as they will not be subject to the new tax surcharge.
Zoopla predicts that removing the threat of additional taxes will deliver a “much needed boost” to buyer demand and overall market activity at the beginning of 2026.
Sellers in the South are expected to benefit most from this change, as more homes in the region are valued above £500,000.
This positive outlook comes at a crucial time when house prices are facing pressure from an increased supply of homes for sale, particularly in southern regions.
Richard Donnell, executive director at Zoopla, said the budget bark was worse than the budget bite for the housing market.
“Home buyers and sellers will welcome the end of the uncertainty that has stalled housing market activity since the late summer,” he 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 home moving decisions over recent months return with greater confidence.”
