The impending stamp duty deadline is ‘distorting’ the the underlying demand picture with weakening sentiment in February a result of time running out for new enquiries to take advantage of reliefs for first time buyers.
Buyer demand sentiment in the latest Royal Institution of Chartered Surveyors (RICS) UK Residential Property Survey shows a net balance reading of -14% in February. This is down from -1% in January and marks the weakest result for the survey’s gauge of buyer demand since November 2023.
Newly agreed sales also tracked well below January numbers at -13% compared to +2%; the lowest since May 2024. Reassuringly supply remains relatively healthy with an eighth successive month of positive net balance with property appraisals similarly running above 2024 (net balance +16%).
The pipeline for new instructions remains solid, say RICS but is tempered by a fall in sentiment around short term sales expectations; slipping to -5% from +9% last month; and although sentiment toward longer terms sales has fallen to its lowest level since the end of 2023, it remains at a net balance of 32%; in part driven by the latest Bank of England interest rate cut, and an ‘appetite for the bank to go further’ says RICS.
“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.”
said Simon Rubinson, RICS Chief Economist, adding
“A key support for the market continues to be the increased flow of existing stock becoming available, giving buyers a greater choice of options. However, leading indicators around new build remain subdued for now, highlighting the significance of the Planning and Infrastructure Bill introduced to Parliament this week.
“Meanwhile, despite a flatter trend in demand for private rental properties, the key RICS metric capturing rental expectations is still pointing to further increases demonstrating that the challenge around supply spans all tenures.”
