Housing market fails to take off during spring season due to stamp duty deadline and trade tensions, as per RICS.
UK property market's momentum has taken a hit, with house prices likely to hover for a few months. March saw a decline in new buyer demand and agreed sales, according to the Royal Institution of Chartered Surveyors (RICS).
Demand slipped to a score of -32%, the lowest since September 2023, while agreed sales dropped from -13% to -16%. These numbers suggest that sentiment is weakening.
"The stamp duty deadline and negative newsflow from the US have put a damper on the property market," said Simon Rubinsohn, RICS' chief economist. He added, "The economy's response to the trade war and Bank of England measures will largely determine the market's future."
Survey respondents predict thatthis slowdown will shape house prices over the next three months, with a net balance of -26% expecting prices to fall. However, the long-term outlook is more optimistic, with a net balance of +39% expecting prices to rise over the next year.
The RICS report, while based on surveyor and estate agent opinions, aligns with trends observed elsewhere. Halifax reported annual house price growth of 2.8% in March, the same as in February, while Nationwide reported a steady annual growth rate of 3.9%.
"The end of the stamp duty holiday explains the soft market in the coming months," said Nationwide's chief economist, Robert Gardner.
Economic pressures, including bill hikes, changes in National Insurance contributions, and the trade war, didn't help the housing market in March. However, mortgage rates have dropped recently, and the Bank of England is expecting faster interest rate cuts.
"Lenders are cutting mortgage rates in response to market conditions," said Ian Futcher, financial planner at wealth management firm Quilter. "But the speed of announcements from the US makes it hard to predict."
While Trump's tariff announcement caused uncertainty, the recent pause has eased some concerns. Yet, the economy will likely remain volatile for as long as Trump remains in office.
Insights:
Although house prices may decline in the short term due to economic pressures and the end of the stamp duty holiday, long-term projections show a stabilizing trend. Experts predict modest to positive growth in UK house prices for 2025, with regional variations expected, with stronger growth anticipated in the north compared to the south.
Economic pressures, such as bill hikes and changes in National Insurance contributions, can impact household budgets, potentially affecting demand and price growth in the housing market. However, low unemployment and rising earnings help mitigate these effects.
Trade wars can influence economic stability, but their direct impact on UK house prices is less clear. The current market resilience suggests that domestic factors such as supply shortages and steady demand are more significant drivers.
- The tariff announcement from the US added uncertainty to the market, but the recent pause has eased some concerns about its immediate impact on UK house prices.
- The end of the stamp duty holiday and various economic pressures, such as bill hikes and changes in National Insurance contributions, are expected to cause a short-term decline in house prices.
- In the long term, experts predict modest to positive growth in UK house prices for 2025, with regional variations expected, with stronger growth anticipated in the north compared to the south due to supply shortages and steady demand.
