Momentum in the UK housing market weakened in February as concerns over interest rates, inflation, and the looming stamp duty deadline dampened confidence. Buyer demand dropped to its lowest level since November 2023, according to the Royal Institution of Chartered Surveyors (RICS).
Around 14% of property professionals reported a decline in demand. A RICS survey suggested that rising stamp duty costs, set to take effect on April 1, could further slow market activity in England and Northern Ireland. Global economic concerns, including trade disputes, also contributed to buyer uncertainty.
House prices showed mixed trends. Halifax reported a slight 0.1% dip in February, bringing the average property price to £298,602. This followed a 0.7% rise in January, when prices peaked at £299,138. However, Nationwide found prices increased by 0.4% in February, bringing the average house price to £270,493.
Newly agreed sales also declined in February, with London experiencing a particularly sharp drop. RICS expects short-term market softness but predicts prices will broadly rise over the next year. About 47% of surveyed property professionals anticipate price increases in the coming months.
The rental market also showed signs of slowing. Tenant demand fell for the fourth consecutive month, marking the longest period without growth since RICS began monthly lettings records in 2012.
Sarah Coles, head of personal finance at Hargreaves Lansdown, noted that the stamp duty deadline significantly impacted buyer activity. “The window of opportunity has effectively slammed shut,” she said. “New buyers and sales have both dropped, and house prices are rising more slowly.”
Coles also highlighted financial struggles among younger renters. “Generation Z and millennial renters have, on average, just £73 left at the end of the month,” she said.
Tom Bill, head of UK residential research at Knight Frank, acknowledged market caution. “While markets still expect two Bank of England rate cuts in 2025, single-digit house price growth remains likely,” he said.
As buyers navigate economic uncertainty, the housing market faces a period of slower growth.
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