The latest RICS UK Residential Property Survey indicates a cooling housing market, with buyer demand weakening significantly in February. The net balance for buyer interest dropped to -14%, a sharp decline from -1% in January, marking the lowest demand levels since November 2023.
Much of this slowdown is driven by the imminent Stamp Duty threshold reduction in April, which will see the exemption decrease from £250,000 to £125,000. With this change looming, some buyers are rushing to complete purchases before the deadline, while others are hesitating, unsure of how the market will react.
Adding to the uncertainty, global economic conditions—including rising inflation, interest rate concerns, and geopolitical tensions—are making both buyers and lenders more cautious. This has resulted in a more measured approach to mortgage approvals and affordability assessments, affecting overall market momentum.
House Prices Are Still Rising, But Growth Is Slowing
Despite weaker demand, UK house prices continue to rise, though at a slower pace. The net balance for price growth stood at 11% in February, marking the second consecutive month of moderation from 25% in December and 21% in January.
Looking ahead, 47% of market respondents still believe house prices will rise over the next 12 months. The key reason behind this optimism is the continued shortage of available homes, which is keeping supply tight despite slowing demand. While more existing homes are entering the market, the new-build sector remains sluggish, struggling with rising costs and planning restrictions.
Rental Market Trends: Low Demand but Higher Prices
The rental market presents an interesting paradox: tenant demand has remained negative for four consecutive months (-4% in February), yet rents are expected to continue rising. This trend is largely due to the fact that landlord instructions are also falling (-22%), meaning the supply of rental properties is shrinking faster than demand.
A net balance of 34% of survey respondents anticipate rental prices rising in the next three months, as landlords exiting the market further squeeze availability. With demand in prime urban areas outstripping supply, rental inflation remains a key concern for both tenants and policymakers.
Market Outlook: What Comes Next?
While the current slowdown has sparked concerns, market analysts believe the dip in demand is temporary. Simon Rubinson, Chief Economist at RICS, emphasized that the market is expected to stabilize later in 2025, with an upward trend in transactions and house prices.
Another crucial factor is the upcoming Spring Statement, where property investors and buyers alike are hoping for policies that support long-term property investment rather than adding more regulatory hurdles. Investors are particularly interested in policies related to buy-to-let taxation, mortgage rates, and housing supply incentives.
In an evolving market like this, securing the right mortgage deal is more important than ever. At Mortgage-Tek, we provide tailored mortgage solutions to help homebuyers, investors, and professionals find the best financing options available.
Whether you’re looking to purchase, remortgage, or expand your property portfolio, our team of mortgage experts can help you navigate the changing landscape and secure the most competitive mortgage rates.
Get in touch with Mortgage-Tek today and take control of your property journey.