House prices in London and the wider south of England have dipped for the first time in 18 months, driven by uncertainty in the run up to the autumn budget, according to Zoopla.

The property website’s latest house price index showed that there had been a year-on-year slight fall of 0.1% in home values across London to £530,000, as of the end of October. In the South East of England, values had declined 0.1% £383,100 and by 0.2% in the South West to £311,200.

This came despite the average UK house price more broadly ticking 1.3% higher year-on-year to £270,200. Zoopla said that most regions and counties outside of the South were registering above average house price inflation, with values in the North West up 2.9% from a year ago.

Zoopla said that the decline in house prices in the South came as rumours of a new annual property tax on homes worth over £500,000 in the lead up to the budget, created uncertainty across the market. It said that this lead to a 12% decline in buyer demand and fewer sales agreed in the four weeks up to 23 November.

However, this speculated new tax was not included in Wednesday’s budget. Instead, chancellor Rachel Reeves announced a new “high value” council tax surcharge on properties worth over £2m, dubbed a “mansion tax”.

Read more: What is a stealth tax and why is it so controversial?

Zoopla said that Wednesday’s announcements would offer some relief to owners of the 210,000 properties for sale across the UK that are valued above £500,000 but below £2m, meaning they would not be liable for the “mansion tax”.

In fact, Zoopla said that the removal of the threat of extra taxes was set to deliver a “much needed boost” to buyer demand and overall market activity at the start of 2026. The property website said that sellers in the South would see the greatest boost given that more homes in the region are worth over £500,000, adding that this is important at a time when house prices face pressure from a greater supply of homes for sale.

Richard Donnell, executive director at Zoopla, said: “The budget bark was worse than the budget bite for the housing market. Home buyers and sellers will welcome the end of the uncertainty that has stalled housing market activity since the late summer.”

“Our data shows the underlying demand to move home remains strong,” he added. “With greater certainty we expect a rebound in housing market activity that builds into the new year with households who paused home moving decisions over recent months return with greater confidence.”