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Buyer demand in the UK housing market slipped in February, touching its weakest levels since late 2023, with expectations that this trend will continue as higher stamp duty costs come into effect next month.
A net balance of 14% of property professionals reported a fall in demand rather than a rise, according to the Royal Institution of Chartered Surveyors (RICS).
The RICS survey said that the upcoming rise in stamp duty, which will apply to some homebuyers starting 1 April, is likely to weaken market activity, particularly in England and Northern Ireland.
RICS chief economist Simon Rubinson said: “The UK housing market appears to be losing some momentum as the expiry of the temporary increase in stamp duty thresholds approaches.
“Some concerns are also being expressed by respondents about the re-emergence of inflationary pressures and the more uncertain geopolitical environment. That said, looking beyond the next few months, sales activity is seen as likely to resume an upward trend with prices also moving higher.”
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From 1 April, the “nil rate” band for first-time buyers will come down from £425,000 to £300,000, while for other homebuyers it will fall from £250,000 to £125,000. It means half of homeowners will have to pay an extra £2,500 per purchase, while another third will pay up to this level.
The report also suggested that ongoing concerns over interest rates, inflation, and global events, are contributing to a decline in buyer confidence. Despite these headwinds, house prices continued to rise in February, even if at a slower pace. Fewer professionals reported price increases compared to the previous months of December and January, indicating a cooling in price growth.
From 1 April, the 'nil rate' band for first-time buyers will come down from £425,000 to £300,000, while for other homebuyers it will fall from £250,000 to £125,000.
Looking further ahead, while the market is expected to continue to soften in the short term, the majority of professionals believe house prices will rise over the next 12 months, RICS said, with a net balance of 47% expecting to see an increase.
The survey also pointed to the volume of newly-agreed sales falling in February, with London-based professionals reporting a particularly noticeable dip in sales agreed during the month.
In the rental market, tenant demand saw a slight dip for the fourth consecutive month. This marks the longest period without a rise in tenant demand since RICS began its monthly lettings records in 2012. Alongside this drop in demand, the volume of new instructions from landlords has also been shrinking.