A leading agent says the stamp duty hike on additional homes from 3% to 5% announced at the Budget has triggered renegotiations on prices of homes on sale.

Jeremy Leaf, the north London agent and former RICS residential chairman, says: “Worries about the Budget did create some uncertainty among our buyers and sellers but many pressed the pause, rather than the stop, button.  The underlying feeling is that interest rates will remain fairly stable or even drop a bit over coming months, which has underpinned confidence and activity.

“The increases in stamp duty for second homebuyers and landlords have resulted in some renegotiation of previously-agreed prices. But any small dip has been outweighed by new interest from first-time buyers keen to take advantage of competitively-priced property becoming available and their own stamp duty changes next spring.”

Holly Tomlinson, financial planner at wealth management service Quilter, says the stamp duty rise is also set to damage the tenant with rent rises as a result of too few investors choosing to buy.

“The government’s new 5% stamp duty surcharge on second homes marks a bold move to curb demand from buy-to-let investors and second-home buyers. The policy aims to make primary homeownership more accessible, especially in popular areas where house prices have surged due to demand for rental and holiday properties. 

“However, with buy-to-let investors potentially being priced out, rental supply may tighten further, especially in already-competitive urban areas, adding fuel to the rental price surge.”

They were making their comments in response to the latest index from the Halifax, which says average UK house prices nudged up 0.2% in October.

This brought the annual growth rate to 3.9%, slightly lower than in September. The average property price has reached a record high of £293,999, surpassing the previous peak of £293,507 set in June 2022, towards the end of the pandemic-era ‘race for space’.

Amanda Bryden, Head of Mortgages at Halifax, says: “That house prices have reached these heights again in the current economic climate may come as a surprise to many, but perhaps more noteworthy is that they didn’t fall very far in the first place.

“Despite the headwind of higher interest rates, house prices have mostly levelled off over the past two and a half years, recording a 0.2% increase overall. 

“That’s a significant slowdown compared to the 21% rise we saw in the equivalent period from January 2020 to the summer of 2022.

“Despite the affordability challenge, market activity has been improving. The number of new mortgages agreed recently reached its highest level in two years. This aligns with average mortgage rates dropping steadily since spring – now over 160 basis points lower than in summer 2023 – coupled with continued positive income growth.

“Looking ahead, borrowing constraints remain a challenge for many buyers. Following the budget, markets expect the Bank of England to cut rates more slowly than previously anticipated, which could keep mortgage costs higher for longer. New policies like higher stamp duty for second home buyers and a return to previous thresholds for first-time buyers might also affect demand.

“While we expect house prices to keep growing, it will likely be at a modest pace for the rest of this year and into next.”

The Halifax saysNorthern Ireland continues to record the strongest property price growth of any nation or region in the UK, rising by 10.2% on an annual basis in October. 

The average price of a property in Northern Ireland is now £204,242. 

House prices in Wales also recorded strong growth, up 5.6%, compared to the previous year, with properties now costing an average of £225,543. 

Once again Scotland saw a more modest rise in house prices, where a typical property now costs £206,480, 1.9% more than the year before. 

The North West remains the region of England with the strongest growth, up by 5.9% over the last year, to sit at £235,587.

London continues to have the most expensive property prices in the UK, now averaging £543,308, up 3.5% compared to last year.