Housing market experiences reversal due to budget constraints
UK Housing Market Growth Remains Modest in 2025 Despite Autumn Budget Measures
The Autumn Budget, delivered by Chancellor Rachel Reeves on Wednesday, included a £5 billion investment aimed at the UK housing market. However, house price growth remained subdued in 2025, with forecasts revised downward to around 1–2% growth for the year.
Major forecasters such as Savills and Rightmove downgraded their 2025 house price growth forecasts to just 1% and 2% respectively, citing low buyer activity despite improved affordability. The slowdown in price growth correlates with general market uncertainty, including impending changes to Stamp Duty thresholds and rates introduced in this budget, which may have dampened market enthusiasm.
Buy-to-let lending surged, with new loans increasing by nearly 39% in number and almost 47% in value year-on-year in early 2025, reflecting increased investment activity in rental properties. However, landlords also faced higher repossessions and arrears, indicating some underlying market stress. Mortgage interest rates for landlords slightly decreased to an average of 4.99%, which somewhat eased financing costs but did not trigger a strong price rally.
The reaction to the Autumn Budget was mixed. Ed Phillips, Lomond CEO, stated that stability has been the key component to the returning health of the UK housing market. He also mentioned further cuts to interest rates as a potential factor for accelerated growth in the housing market.
In October, house prices climbed by 0.1% compared to September, but the monthly rate of house price growth slowed from 0.6%. According to Ed Phillips, this slowdown during October was due to Autumn Statement uncertainty. New figures from Nationwide's House Price Index suggest the build-up to the budget negatively affected the costs of current homes.
Despite the modest growth in 2025, longer-term forecasts remain more optimistic, with some expectations of stronger growth beyond 2025. Ed Phillips expects the rate of growth seen across the market to once again accelerate. Marc von Grundherr, director of Bentham and Reeves, expects a heightened level of activity between now and March of next year due to stamp duty relief revert.
For further details, you can access Nationwide's full figures. It's worth noting that no significant new facts were provided in the related news section about Wealden Council and Homes England.
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The Autumn Budget's £5 billion investment in the UK housing market might lead to an increase in housing finance, as investors aim at rental properties, given the surge in buy-to-let lending. However, despite the rise in buy-to-let lending, the Autumn Statement uncertainty and impending changes to Stamp Duty could potentially slow the growth of house prices.
