Momentum in the UK housing market eased in February, according to the latest Rics UK Residential Property Survey.
Buyer demand weakened, posting a net balance reading of -14% in February. This figure is down from -1% in January and marks the weakest indication of buyer demand since November 2023.
According to the survey, the imminent changes to Stamp Duty from April, when the threshold will reduce from £250,000 to £125,000, is expected to slow market activity, and it is believed that this is increasingly influencing the slowdown as this deadline approaches.
Further to this, geopolitical and international economic uncertainties contribute to a less favourable climate for the housing sector.
Despite these challenges, house prices at a national level continue to rise overall, albeit at a subdued rate. The latest net balance for price growth came in at 11%, which remains consistent with a subtle upturn in prices. However, this series has now moderated in each of the last two months, easing from 25% and 21% in December and January, respectively.
Looking to the future, whilst the market is expected to continue to soften in the short-term, most respondents believe that house prices will rise over the next twelve months. Indeed, the net balance for the year-ahead price expectations series sits at 47%, broadly in-line with the average reading posted over the past six months.
In the lettings market, tenant demand recorded a figure slightly below zero for a fourth month in a row, returning a net balance of -4% in February.
Consequently, this is longest stretch without a positive reading for this indicator since the monthly lettings dataset was established in 2012. This points to a broadly stagnant trend rather than an abrupt downturn. Alongside this, landlord instructions continue to show negative momentum, registering a net balance of -22%.
Rising rental prices
Despite the subdued demand, a net balance of 34% of survey participants expect to see rental prices rising over the coming three months. Whilst demand is down, supply appears to be reducing at a faster rate, likely causing further rental price rises.
Commenting on the latest data, 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: “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.”
Shawbrook managing director of real estate Emma Cox commented: “February saw a slight dip in market activity, reflecting an unexpected drop in demand—despite first-time buyers rushing to complete purchases before the stamp duty exemption ends in March.
“However, the sales outlook remains positive over the next 12 months, and while the Government’s housebuilding targets will take time to deliver, rental demand continues to far exceed supply. For seasoned portfolio investors, this presents a strategic opportunity. High-quality, energy-efficient homes remain in short supply, particularly in prime locations and high-yield rental sectors.”
She added: “With the Spring Statement approaching, investors will be watching closely, hoping for policies that support long-term property investment rather than additional regulatory burdens. Now is the time to reassess portfolio strategies—securing competitive lending terms, ensuring compliance with evolving regulations, and positioning assets for strong returns in a shifting market.”
