House prices climb despite market slowdown – RICS

House prices rose slightly last month but buyer demand is slipping, the Royal Institution of Chartered Surveyors (RICS) says.

Its Residential Property Survey highlights a market grappling with the prospect of looming stamp duty rises and wider economic concerns.

Also, enquiries from prospective home buyers have slipped.

RICS says the latest data, which measures sentiment among its members, offers the gloomiest outlook for buyer interest since November 2023.

Meanwhile, completed sales also fell, reflecting an increasingly cautious buyer market.

Renter demand falls

In the PRS, RICS says that tenant demand has fallen for the fourth consecutive month – the longest stretch since 2012.

However, RICS says this is persistent stagnation rather than a sharp decline.

Meanwhile, landlord instructions are also falling, and more surveyors believe rents will rise this year.

They point to weak demand but highlight that supply seems to be shrinking more quickly to drive up costs.

Housing market losing momentum

The organisation’s 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.”

Risk averse homebuyers

Tom Bill, the head of UK residential research at Knight Frank, said: “There has been a mood of risk aversion in global financial markets and among UK homebuyers in recent weeks.

“Donald Trump’s erratic trade policy and increases in German defence spending are two reasons beyond the control of the government that most UK mortgage rates remain above 4%, which is keeping demand in check.

“There is also uncertainty around what measures the UK government may announce in this month’s spring statement to increase its financial headroom, as well as the inflationary impact of some of its policies.”

He adds: “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.”

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