The UK housing market showed signs of softening in March, according to the latest UK Residential Property Survey from the Royal Institution of Chartered Surveyors (RICS).
Its latest report indicates a noticeable slowdown in activity following an initial rush to complete transactions before the 1 April stamp duty deadline.
New buyer demand fell sharply, with a net balance of -32%, down from -16% in February – the weakest reading since September 2023.
Meanwhile, agreed sales also declined, with a net balance of -16%, marking a further dip from -13% the previous month.
Near-term expectations remain subdued, with respondents anticipating a continued decline in sales over the next three months. However, a net balance of +11% expect sales volumes to rise over the year ahead.
STALLING GROWTH
House price sentiment also cooled. The headline gauge posted a net balance of +2%, down from +20% in January and +11% in February, suggesting price growth has largely stalled. While most UK regions mirrored this trend, Scotland and Northern Ireland appeared more resilient to downward pressures.
TENANT DEMAND UP
In the rental sector, tenant demand picked up for the first time since October 2024, with a net balance of +20% of survey participants reporting an increase. At the same time, landlord instructions continued to decline (-24%), fuelling expectations of rising rents in the months ahead. A net balance of +31% foresee rental prices climbing further by summer.
Simon Rubinsohn, RICS Chief Economist, reckons that the expiry of the stamp duty break, combined with a wave of negative economic news and concerns over a potential global trade war, have dampened market sentiment.
He said: “The expiry of the stamp duty break was always going to lead to a pause in activity in the sales market.
“However, the latest results, and indeed the anecdotal remarks from respondents to the survey, suggest that the shift in sentiment has been aggravated by the slew of negative macro newsflow over the past few weeks.
“Looking forward, the impact on the market will in no small part depend on how the economy is affected by the emerging trade war and the response of the Bank of England to the shifting environment. For now, it is noteworthy that the longer-term RICS expectations metrics are still relatively resilient, but they have the potential to be blown off course if the tariff headwinds intensify.”
BETTER MORTGAGE DEALS
Tom Bill, head of UK residential research at Knight Frank, added: “Ideally, the appearance of more sub-4% mortgages would be accompanied by an end to the gyrations seen on money markets in recent days.
“The risk is that tariffs may ultimately prove to be inflationary and the spillover effects mean upwards pressure on mortgage costs in the UK.
“For now, the housing market feels steady although the prospect of a tax-raising autumn Budget will throw more uncertainty into the mix later this year.”
MARKET SLOWDOWN
And Tomer Aboody, director of specialist lender MT Finance, added: “We are seeing a slowdown in the market which correlates with the stamp duty changes, as well as further negative feelings within the macro and UK economic climate.
“This further proves that some assistance from the government is needed in order to stimulate growth.
“Hitting the UK with higher taxes, higher stamp duty along with businesses taking further hits from the October budget, has provided so much uncertainty and this slowdown. Let’s hope there are some positive changes to come.”
