RICS: Due to trade tensions and the stamp duty deadline, there will be no spring boost for the housing market

The real estate market has slowed due to rising stamp duty expenses and anxiety over Trump's tariffs

House prices are expected to remain stagnant over the coming months as a result of the UK property market's spring being dampened by higher stamp duty bills and unfavorable news from the US.

The most recent Royal Institute of Chartered Surveyors (RICS) survey indicates that both agreed sales and new buyer demand decreased in March as buyers ran out of time to finish a transaction before the stamp duty deadline of March 31.

After declining from -16 percent in February to a net balance score of -32 percent, new buyer demand reached its lowest level since September 2023. In the meantime, agreed sales fell from -13 to -16 percent.

The RICS report is a sentiment survey that does not rely on primary transaction data, but rather on the opinions of surveyors and estate agents. Net balance scores, which can range from -100 to +100, are computed by deducting negative responses from positive responses.

In March, more agents reported a decline than an increase, according to scores of -32 percent and -16 percent. Decreased numbers compared to February indicate a decline in sentiment.

There was always going to be a lull in sales market activity when the stamp duty break ended. However, the most recent findingsas well as the anecdotal comments made by survey participantsindicate that the recent wave of unfavorable macro news has made the sentiment shift worse," stated Simon Rubinsohn, chief economist at RICS.

The way the economy is impacted by the impending trade war and how the Bank of England reacts to the changing environment will have a significant influence on the market's future.

According to survey participants, these obstacles will have an immediate effect on home prices. The percentage of respondents who think prices will decline over the next three months has decreased from -16 percent in February to -26 percent.

The sentiment is more positive over a 12-month period. Over the next year, a net balance of +39 percent of respondents anticipate price increases. This remains below the reading of +47 percent from February.

What are the differences between this and other data on home prices?

Though it focuses on sentiment rather than transaction volumes and official house price data, the RICS survey confirms trends that we are witnessing in other places.

Halifax reports that the annual growth rate for home prices stagnated in March at 20.8 percent, which is the same as it was in February. Every month, prices dropped by 0.5 percent.

The annual growth rate, which remained stable at 3 percent in March, did not alter, according to nationwide data on home prices. The monthly percentage was zero percent.

With the stamp duty holiday ending at the end of March, these price trends are not surprising, according to Robert Gardner, chief economist at Nationwides.

The market will probably stay a little soft in the upcoming months because activity will have been pushed forward to avoid the extra tax obligations, which is a common trend seen after stamp duty holidays end.

Economic factors affecting the real estate market.

The March housing market was not aided by other economic factors.

According to investment platform Hargreaves Lansdown, households were preparing for a number of April bill hikes throughout the month, with the average household now paying nearly £50 more per month for necessities.

Wage growth is anticipated to slow going forward as businesses manage the additional costs, as changes to employers' National Insurance contributions also went into effect on April 1. Moreover, redundancies may appear.

There has also been an increase in general economic anxiety. US President Donald Trump's "Liberation Day" tariff announcement, which was delivered on April 2nd, caused market chaos and hung over March.

Although some of the most severe tariffs were paused on April 9th, which caused economists to rescind their recession warnings, uncertainty is likely to persist as long as Trump is president.

The good news is that mortgage rates have decreased recently, and lenders are now expecting the Bank of England to reduce interest rates more quickly. Nevertheless, even this is unpredictable due to the rapidity of the announcements coming from the US.

Ian Futcher, financial planner at wealth management company Quilter, stated that some lenders have lowered mortgage rates in response to the decline in swap rates, and more are likely to follow if market conditions continue.

"Although the recently announced pause has somewhat altered the situation, there is still a great deal of uncertainty regarding how things will turn out.