Annual House Growth Hits an 18-Month Low

The latest Halifax report shows annual house growth slowing sharply, marking the weakest rise in property prices in 18 months. House prices rose by just 1.3% compared to the same period last year, marking a notable drop from 5% annual growth recorded in September 2024.

On a monthly basis, prices also edged lower, falling by 0.3% between August and September. The slowdown reflects widespread caution among both buyers and sellers. Moreover, many have paused decisions while awaiting clarity before the November Budget.

Regional Divide: Strong North, Slower South

While the national trend points to cooling prices, the picture varies significantly across the UK. Northern Ireland led the way with the strongest annual growth at 6.5%, followed by Scotland at 4.5% and the North West at 3.9%. These regions have continued to benefit from more affordable housing stock and resilient local demand.

By contrast, southern regions have experienced much slower growth – or even declines. The South West saw a small drop of 0.2%, while London and the South East managed only modest increases of 0.6% and 0.2%, respectively. Analysts note that higher borrowing costs and affordability constraints continue to pressure these markets. Moreover, prices still sit well above the national average.

Annual House Growth and Buyer Caution Ahead of the Budget

Estate agents have reported that many prospective buyers are adopting a wait-and-see approach. According to Matthew Thompson, Head of Sales at Chestertons, “September has been a challenging month as many buyers paused their decisions ahead of the November Budget. Uncertainty over potential tax changes is holding back activity, but if the announcements bring clarity, confidence could return quickly and create an unusually busy end to the year.”

This pre-budget hesitancy is not new but appears to have intensified this autumn. Analysts say that discussions around stamp duty reforms, capital gains adjustments, and housing supply initiatives have left both buyers and sellers unsure about how to proceed.

The Market’s “Soft Landing” Explained

While the slowdown may appear concerning, some experts view it as a sign of stabilisation rather than crisis. Jonathan Hopper, Chief Executive of Garrington Property Finders, explained that the market’s moderation signals a soft landing. Moreover, he emphasised it is not a sharp correction.

“The weakness of the economy and anxiety about next month’s budget are contributing factors,” Hopper explained, “but the primary drivers of the market’s soft landing are the immutable laws of supply and demand. In many parts of the country, the number of homes for sale far outstrips the number of serious buyers.”

In essence, the balance between availability and demand is reasserting itself. With more stock on the market and fewer buyers competing for each property, price inflation has naturally cooled.

Annual House Growth: Economic Context and Mortgage Pressure

The broader economic environment continues to play a crucial role. Inflation remains above target, and although interest rates have stabilised, mortgage affordability remains a challenge for many households. Lenders have become more selective, and fixed-rate deals – while easing slightly – still sit higher than the ultra-low levels seen in 2021–2022.

As a result, first-time buyers in particular are facing tighter lending conditions, while existing homeowners looking to remortgage are navigating costlier repayments. This has translated into lower overall transaction volumes and lengthier decision-making times across the sector.

Signs of Optimism for Late 2025

Despite the subdued figures, several analysts remain cautiously optimistic. If the autumn budget introduces supportive measures, the market could quickly gain momentum. Moreover, tax relief or buyer incentives may spark a short-term uplift.

Estate agencies also note a growing pool of “on-hold” buyers who could re-enter the market quickly if confidence improves. A stable interest rate outlook combined with clearer fiscal policy could trigger a late-year rebound, particularly in urban and commuter-belt areas where demand remains fundamentally strong.

Annual House Growth: Looking Ahead

The UK housing market’s current slowdown highlights a period of transition rather than turmoil. After years of rapid growth, the market appears to be recalibrating – balancing economic reality with long-term stability.

While uncertainty around the November Budget has dampened activity, experts agree that once fiscal clarity is restored, confidence may return just as swiftly. Until then, buyers and sellers will likely stay cautious. Furthermore, they await clearer signals on taxation, borrowing, and government support.

The latest data from Halifax underscores that the UK property market is entering a cooling phase, with annual house price growth now at its lowest since early 2024. Regional resilience and strong demand continue to offer stability. However, all eyes now turn to the November Budget, which could shape the market’s next move.