The housing market started 2025 with a gathering momentum, as the economy showed signs of resilience and the domestic political situation settled down. However, the latest figures from the Royal Institution of Chartered Surveyors (RICS) have shown that the pace has slowed down during February.
According to The Guardian, London-based estate agents in areas such as Hackney are reporting a dip in buyer demand and lower volumes of newly agreed sales in February 2025. The RICS report indicates that there are several contributory factors behind the slowdown in market activity.
These include the imminent end to the temporary increase of stamp duty thresholds; continuing high interest rates; and an uncertain global economic picture. However, the report also indicated that the housing market is expected to recover broadly in line with expectations by the end of the year.
Simon Rubinson, chief executive of RICS, 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.”
He added: “That said, looking beyond the next few months, sales activity is seen as likely to resume an upward trend with prices also moving higher. A key support for the market continues to be the increased flow of existing stock becoming available, giving buyers a greater choice of options.”
“Meanwhile, despite a flatter trend in demand for private rental properties, the key RICS metric capturing rental expectations is still pointing to further increases demonstrating that the challenge around supply spans all tenures.”
What is stamp duty and how is it changing on 1 April 2025?
Stamp duty is a tax paid by the buyer of a property on completion of a sale. The tax is scalable in relation to the value of the property, but the amount you pay is also affected by other factors, such as if you are a first time buyer; if you are buying a second home; or are just completing a regular house move.
The thresholds for stamp duty rates were raised by the previous government in 2020 to stimulate housing market activity after the Covid-19 lockdowns, and have remained largely unchanged since. However, from 1 April 2025, the thresholds will significantly reduce, meaning that many more buyers will have to pay the tax.
For example, first time buyers of properties worth over £300,000 will have to pay a tax of five per cent of the property value over £50,000, lowered from a threshold of £425,000. First time buyers of properties worth over £500,000 will have to pay tax on the full property value. However, properties up to the value of £300,000 will continue to be exempt from stamp duty.
