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Momentum in the UK housing market slowed in February amid signs of weakening buyer confidence, according to surveyors.
Buyer demand slipped to its weakest levels since November 2023, with a net balance of 14% of property professionals reporting a fall in demand rather than a rise, according to the Royal Institution of Chartered Surveyors (Rics).
Its survey of professionals indicated that higher stamp duty costs for some home-buyers from April 1 are expected to weaken market activity. Stamp duty applies in England and Northern Ireland.
Concerns over interest rates, inflation, and global events also appear to be dampening buyer confidence, the report said.
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.
House prices continued to increase generally in February, but at a more subdued rate, with a smaller net balance of professionals reporting price increases during that month compared with December and January.
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.
This is broadly in line with price expectations recorded over the past six months, the report said.
In the rental sector, there was a small decline in demand from tenants for the fourth month in a row.
This marks the longest period without an increase in tenant demand since Rics’ monthly lettings records started in 2012.
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But, alongside this, new instructions from landlords have also been shrinking, the report said.
While demand for rental properties has fallen, supply appears to be reducing at a faster rate, pointing towards further rental price rises, according to Rics.
A net balance of 34% of survey participants are expecting to see rental prices rising over the next three months.
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.”
He added: “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.”
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “The window of opportunity has effectively slammed shut on buyers, because even in February they knew there was next-to-no chance of getting a sale sorted before the end of the stamp duty holiday.
“Unsurprisingly, it has sucked some of the life out of the market. New buyers and sales have both dropped – with new buyers at their lowest ebb since the end of 2023. House prices have continued to rise, but not as quickly, and agents are fairly convinced we’ll be in this lull for a while yet.”
Ms Coles added that a “savings and resilience barometer” from Hargreaves Lansdown had found that “younger renters in particular are struggling, and on average Generation Z and Millennial renters have just £73 left at the end of the month”.
Tom Bill, head of UK residential research at Knight Frank, said: “Markets still expect two Bank of England rate cuts in 2025 and we still believe there will be single-digit house price growth, but some caution is understandable.”
