The Royal Institution of Chartered Surveyors (RICS) UK Residential Property Survey for March found that activity faded at the end of the month and respondents to its survey said buyer demand fell to a reading of negative 32%, compared to negative 16% in February.
RICS said this was the weakest demand sentiment since September 2023.
Agreed sales activity also slipped from negative 13% to negative 16% month-on-month, which was again the lowest sentiment since the end of 2023.
In the near term, market professionals expect sales to decline further and gave a reading of negative 18% for the next three months, down from a response score of negative 6% in February. Further ahead, sentiment for the housing market in 12 months’ time was less negative, as 11% of respondents predicted sales volumes to rise.
Despite this, the 12-month outlook has softened over the last few months, and the prediction made in March was the least optimistic over the last 16 months.
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More properties listed as house prices flatten
Although sales activity was weaker, respondents to the RICS survey gave a score of 6% for new property listings, suggesting supply was continuing to rise. This was lower than the average reading of 17% over the last six months.
Market appraisals also continued to be healthy and higher than the same period in 2024, as respondents gave a score of 20% for this metric.
Respondents gave a reading of 2% for house prices in March, down from readings of 20% and 11% in January and February respectively, implying flat growth.
Looking three months ahead, respondents gave a score of negative 26% for house prices, a sharper decline than the score of negative 16% previously.
However, the 12-month house price expectations were positive, at a reading of 39%. Still, this was lower than the previous score of 47%.
RICS said uncertainty around US global tariffs and the responses to that may impact the housing market in the future.
Simon Rubinsohn, chief economist at RICS, said: “The expiry of the stamp duty break was always going to lead to a pause in activity in the sales market. However, the latest results, and indeed the anecdotal remarks from respondents to the survey, suggest that the shift in sentiment has been aggravated by the slew of negative macro news flow over the past few weeks.
“Looking forward, the impact on the market will in no small part depend on how the economy is affected by the emerging trade war and the response of the Bank of England to the shifting environment. For now, it is noteworthy that the longer-term RICS expectations metrics are still relatively resilient, but they have the potential to be blown off course if the tariff headwinds intensify.”
Tomer Aboody, director of MT Finance, added: “We are seeing a slowdown in the market, which correlates with the stamp duty changes, as well as further negative feelings within the macro and UK economic climate. This further proves that some assistance from the government is needed in order to stimulate growth.
“Hitting the UK with higher taxes, higher stamp duty along with businesses taking further hits from the October Budget, has provided so much uncertainty and this slowdown. Let’s hope there are some positive changes to come.”
Rental demand up for first time in five months
The score for rental demand rose to 20% in March, the first month an increase was recorded since October.
In contrast, respondents reported a fall in landlord instructions with a score of negative 24%.
As for rental prices, those polled gave a reading of 31%, suggesting higher prices in the next three months.
Jeremy Leaf, North London estate agent and a former RICS residential chair, said: “With lettings, we have found demand has been supported over the past few weeks at least by aspiring first-time buyers who were unable to profit from the stamp duty concession before it disappeared who were now looking to re-let.
“However, the continuing lack of stock and slow increase in the number of landlords wanting to sell has exacerbated the supply/demand imbalance and keeping rents up despite affordability concerns.”
