Is the Autumn Budget holding the housing market back?

The UK housing market stands at a crossroads, shaped by a balance of resilience and uncertainty. Speculation ahead of the Budget is weighing on sentiment with buyers and developers awaiting clarity. Our analysis of the Q3 data points to a muted performance, sprinkled with some opportunity and optimism. The market’s next move will be shaped by government influenced consumer behaviours, driven by policy decisions in the next month. Well targeted incentives, access to affordable debt and clarity around infrastructure commitments can help close the viability gap and ignite a stalled market.

Resilient house prices hold up against market challenges

Average house prices rose by 0.03% in Q3 2025, slowing compared to growth over the past 18 months. Regional performance varies, with growth in the last year being driven by northern regions, while the south has continued to stagnate. Over the past year, Northern Ireland (9.7%), the North (5.1%) and Yorkshire and the Humber (3.81%) regions saw the highest growth. In contrast, the South-East and London have been flat. These areas may be more sensitive to speculation around the Autumn Budget and other such factors including previous tax changes and regulation such as Gateway 2, which has stalled the pipeline of higher rise developments.

Looking ahead, the dip in these regions may present a strategic opportunity for well-capitalised buyers. However, the Budget announcements and the timeline of their implementation will be crucial.

The Q3 upturn in housing transactions was a predictable bounce back from the sharp decline in Q2, wiped out by the end of the Stamp Duty holiday which had accelerated transactions in Q1. Whilst the last 12 months of transactions volume remains stable – broadly tracking the five-year rolling average of 1.2m transactions, forward indicators signal a cooling market. The September RICS survey reported a net balance of -19% for new buyer enquiries and longer sale completion times.

Stamp Duty reform: could changes in SDLT unlock the market?

The industry has faced mounting uncertainty ahead of the Autumn Budget, driven by property tax speculation, including the reform of Stamp Duty Land Tax (SDLT). SDLT generates in the region of £15bn annually for the Treasury but is widely viewed as a market barrier. At our recent tax event, 64% of property experts ranked stamp tax reform as the most positive potential change. Reform could unlock market activity and stimulate both ends of the property ladder.

Budget key to mortgage market in 2026

Mortgage approvals have gradually increased throughout 2025, rising by 1% in Q3. While the Bank of England (BoE) held rates in November, it has consistently reduced rates quarterly over the past 18 months.

Affordability remains strained. September data showed a 1% increase in mortgages with loan-to-value (LTV) ratios above 90%. The average mortgage term has extended beyond 25 years, reflecting the challenges faced by first-time buyers. In Q3, the average two-year fixed rate for a 75% LTV was 4.19%, while the equivalent 95% LTV rate was slightly above 5%. Looking ahead, we anticipate further rate adjustments next year. In the meantime, housebuilders are offering high incentives to stimulate sales, eroding margins. The industry awaits the Chancellor’s announcements later this month, hoping for policies that address affordability.

With new homes targets being retained at 1.5m the Chancellor needs to stimulate potential home owners appetite to move from rental to ownership, and to encourage upsizing and investing in the family home.. The target captures the housing needs for the UK. However, the need for new homes does not represent the demand levels, distorting visibility in the housing market. For those looking to predict volumes there is a clear disparity between need and demand.

The indirect impacts of non-property tax rises or inflation as a result of the Budget should also be considered. Reducing disposable income may impact the mortgage market, pushing home ownership further out of reach and slowing transactions, the impact would vary by region.

The NRLA Landlord Confidence Index remains firmly negative, primarily driven by government policy and regulation worries. There has been an exodus of private landlords in the market, impacting supply. In policy, the Renters’ Rights Bill became law in October in the UK, this followed the passing of the Housing (Scotland) Bill by the Scottish Government. Uncertainty surrounding legislation has been detrimental to investment, the latter with rent controls at its heart, has made exemptions for markets such as Built to Rent, realising the need for large scale investments.

What does the housing development pipeline look like in the UK?

There are some green shoots arising on site developments. Project starts are up 16% compared to the same quarter last year, but completions are down 19%, with the sharpest drops in London and the South.

Around a quarter of last year’s completions were public sector or affordable housing, further reinforcing the need to support the investment in private housing to make a dent in targets. Private residential builders remain cautious around committing to large scale development with an expectation that the timing of the Autumn Budget in the run up to Christmas, completions will further reduce.

Planning approvals is on a downward trend. Only 221,000 homes received planning consent last quarter, a 7% drop from the previous year. Although foundational work has begun on planning reform, local plans and green belt reviews etc, these changes will take time to impact delivery and their impacts cancelled out by other viability challenges.

The percentage of planning decisions made within statutory timeframes peaked this year. But in the context of less submissions, questions of whether the system will cope when volumes ramp up remain. In the appeals system, the percentage of major dwelling appeals allowed in 2025 has been on average 13% higher than 2024.

Workforce shortages continue to constrain the industry. While some initiatives have started, targeted government action is needed to address skilled labour gaps. Support must go beyond apprenticeships. With UK productivity downgraded, funding is needed to help the industry adopt new technologies and build more efficiently.

The verdict

The housing market remains resilient despite headwinds. However, the recent slowdown and some forward indicators suggest the government’s target of 1.5m homes is more out of reach than it was before. Arguably any incentives or new policies in the Autumn Budget would now come too late, but are still necessary.

However, we do believe the market is poised for an uptick, the announcements by Rachel Reeves on the 26 November are critical to enable to industry to make the correct turn and move forward with confidence, avoiding 2026 being as flat as 2025 has turned out to be.

RSM housing market predictions

• House prices will increase by 1% during 2025, a reduced increase from early predictions of 4%. 2026 prices will increase by only 2%.
• Over the next five years, house prices are expected to grow by 22%.
• Housing completions will fall further in Q4 as a result of fiscal announcements and households predicted a further squeeze on disposable income.
• We maintain our prediction that housing volumes will increase in 2026, but now forecast a slower start than previously expected.
• Completions are likely to fall in Q4 of 2025 and see a much slower start in 2026 than anticipated.
• BOE likely to reduce Interest rates in 2026 stimulating consumer activity but inflation levels are anticipated to sit at 2.8% which is above the 2% target.
• The mortgage reform will increase borrowing capacity for homeowners and further stimulate the housing market.

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