Sales and demand both dropped in April after the stamp duty thresholds reverted back to previous levels, the RICS UK Residential Survey has revealed.
Some -33% more surveyors saw a drop in enquiries in April, while a net -31% also saw agreed sales decline.
After the stamp duty thresholds reverted the tax is now charged on properties from £125,000, or £300,000 for first-time buyers; down from £250,000 and £425,000 respectively.
Simon Rubinsohn of RICS said: “Although geopolitical developments haven’t helped the mood music in the residential market over the past month, the main reason for the dip in the key RICS sales activity metrics lies in the expiry of the stamp duty holiday at the end of March.
“Near term expectations indicators suggest the subdued trend will persist for the next few months at least but looking beyond this, the results are more encouraging reflecting in part the prospect of deeper interest rate cuts than previously anticipated.”
Tomer Aboody, director of specialist lender MT Finance, says: “We’ve been hearing and seeing the volatility linked to the October Reeves Budget, where she declined to extend the stamp duty concession and announced multiple other changes to national insurance, taxes etc. The end of the stamp duty holiday in March saw a big push in transactions completing by the end of the month so that buyers could avoid the tax increase.
“We are now seeing the fallout, with transactions and mortgage approvals falling, as buyers and sellers wait to see whether the anticipated interest rate cut comes. If it does, in turn this will hopefully encourage banks to reduce their mortgage rates, allowing affordability to ease and encouraging market activity.”
Many felt the Trump tariff announcements reducing confidence, however, some are pleased with the general level of resilience the market is displaying in an uncertain global climate.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “Unfortunately, not even the arrival of better weather and the prospect of lower mortgage rates could shake the traditionally busier spring housing market out of its lethargy.
“Too many available flats has meant only demand for houses has held up well in recent weeks – and more than we dared to expect. There’s no doubt the end of the stamp duty holiday in March brought forward many moving decisions.
“As a result, prices are softening as most buyers and sellers are not withdrawing but preferring to find middle ground if possible despite continuing worries about economic prospects and pace of interest rate falls.”
A net balance of –15% anticipating a further dip in sales over the next three months. Despite this, there are signs of improvement on the horizon.
Over the year ahead a net +17% of expect sales to rise, up from +11% in March, suggesting that longer-term sentiment remains more positive.