The UK’s housing market faces recovery challenges

The UK’s housing market is navigating turbulent waters following a sharp 28% drop in transactions in April 2025, an analysis from Knight Frank reveals.

It says the turmoil was triggered by stamp duty rules that cut the nil rate band and increased the surcharge for additional properties.

According to Tom Bill, the head of UK residential research at real estate firm, this echoes a similar upheaval in 2016 when a 3% surcharge for landlords and second-home owners caused a comparable market jolt.

He explains: “Frustratingly, the distortive effect of the SDLT changes makes it difficult to assess the underlying health of the market, which would normally feel more active at this time of year.

Transactions rise

Data from HMRC reveals a dramatic 104% surge in transactions in March 2025 compared to the previous year, as buyers rushed to beat the new rules.

However, April’s slump was stark, outpacing the 18% decline seen in April 2016.

The 2025 changes, which included a £11,250 saving for first-time buyers, intensified this rollercoaster effect, Knight Frank says.

in 2016, transactions rebounded by 11% from April to May, with an additional 8% rise by June, despite the Brexit vote’s shadow.

Don’t expect a bounce back

However, the market remained subdued for the rest of 2016, with annual declines of 5-10% as investor confidence waned.

Mr Bill said: “While a rebound will inevitably follow this year and borrowing costs are on a broad downwards trajectory, the housing market faces a different set of obstacles, which are more economic than political in nature.”

While Labour’s majority means Westminster is less chaotic, a bank rate of 4.25% – compared to 0.25% in 2017 – creates a tougher lending environment.

Also, recent speculation about stalled rate cuts adds further strain.

Mr Bill said: “Despite the risks, we revised our UK house price forecasts marginally higher last month to reflect the expectation that more sub-4% mortgages should become available over the next six months as inflation is ultimately tamed.”

Share This Article