House prices stumbled last month, slipping when they were expected to climb, just as Chancellor Rachel Reeves sharpens her pencil over a potential tax raid on Britain’s wealthiest homeowners.
According to Nationwide’s house price index, the average home value edged down 0.1pc between July and August, falling from £272,664 to £271,079. Analysts had predicted the opposite—a 0.1pc rise—after July’s gain was quietly revised down to 0.5pc.
The slowdown was evident year-on-year as well. Annual growth cooled to 2.1pc, compared to 2.4pc in July, hinting that momentum in the property market is losing its stride.
The dip followed revelations in The Telegraph that Reeves is preparing a mansion tax on property sales as part of her autumn Budget plans. Reports also suggest she may strip back private residence relief—the long-standing exemption that shields family homes from capital gains tax—on high-value properties.
Analysts warn the mere speculation is already weighing on sentiment. “The risk is that rumours of new property taxes hit buyer confidence in the months ahead,” said Ashley Webb of Capital Economics. Tom Bill of Knight Frank echoed the concern, warning that pre-Budget jitters could chill both sales and prices, marking a repeat of last year’s uncertainty.
The drop in prices came despite a move that would usually buoy the market: the Bank of England’s decision to cut interest rates from 4.25pc to 4pc in August, lowering the cost of borrowing.
“Affordability remains stretched by historical standards,” explained Robert Gardner, Nationwide’s chief economist. “House prices are still high compared to household incomes, making deposits difficult for buyers already struggling with the cost of living.”
In short: cheaper mortgages may not be enough to counter looming tax hikes, leaving the housing market caught between falling confidence and stubbornly high prices.
