Housing market activity took a pause as stamp duty holiday expired – surveyors

The UK’s housing market experienced a notable slowdown in February 2025, as the impending conclusion of the stamp duty holiday led to a decline in buyer demand and sales activity, according to the latest survey by the Royal Institution of Chartered Surveyors (RICS). This deceleration follows a period of heightened activity spurred by buyers rushing to complete transactions before the 31 March deadline.

Decline in buyer demand and sales

The RICS survey revealed that buyer demand fell to its lowest level since November 2023, with a net balance of 14% of property professionals reporting a decrease in interest from potential purchasers. This marks a significant drop from previous months and indicates a cooling market as the stamp duty holiday neared its end. Additionally, newly agreed sales moved into negative territory, with a net balance of -13% compared to +2% previously. London experienced a particularly noticeable dip in sales volumes during this period. citeturn0search6

Factors influencing market dynamics

Several factors have contributed to this slowdown:

1. Stamp duty changes: The reduction in stamp duty thresholds, effective from 1 April 2025, prompted many buyers to expedite their purchases to benefit from the tax break, leading to a subsequent lull in activity. citeturn0search6
2. Economic uncertainty: Concerns over rising interest rates, inflation, and global events have dampened buyer confidence, causing hesitation among potential purchasers. citeturn0search6
3. Global events: Uncertainties stemming from international developments, including trade tensions and geopolitical issues, have added to the cautious sentiment in the housing market. citeturn0search6

Regional variations in house prices

Despite the overall slowdown, house prices have continued to rise in certain regions. Northern Ireland, Scotland, and the North West of England have shown particularly strong price growth, with indicators remaining firmly in expansionary territory. Conversely, London is expected to experience the largest drop in house prices in the near term, as the capital is disproportionately affected by economic uncertainty and higher taxes. citeturn0search6turn0search4

Market outlook

Looking ahead, near-term sales expectations have turned slightly cautious, with a net balance of -5%, down from +9% previously. However, the twelve-month outlook remains positive, with a net balance of +32%, indicating that many respondents anticipate a recovery in sales activity over the coming year. citeturn0search6

Rental market observations

In the lettings sector, tenant demand remained slightly below zero for the fourth consecutive month, registering a net balance of -4% in February. Landlord instructions continue to decline, with a net balance of -22%. Despite this subdued demand, a net balance of +34% of survey participants foresee rental prices rising over the next three months, up from +18% previously. citeturn0search6

Expert insights

Simon Rubinsohn, RICS Chief Economist, commented on the findings: “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.” citeturn0search7

Sarah Coles, head of personal finance at Hargreaves Lansdown, added: “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.” citeturn0search7

Conclusion

The expiration of the stamp duty holiday has led to a temporary pause in housing market activity, with declines in buyer demand and sales volumes. While certain regions continue to experience price growth, the overall market sentiment remains cautious due to economic uncertainties and upcoming tax changes. However, the longer-term outlook suggests a potential recovery in sales activity and price increases over the next twelve months.