The housing market may be on the road to recovery, new data from the Royal Institution of Chartered Surveyors (RICS) suggests, with buyers now returning after April’s stamp duty changes.
Surveyors have reported subdued demand since stamp duty thresholds dropped in April, pushing up the cost of buying a property and slowing house price growth.
But the latest UK Residential Market Survey from RICS for June 2025 shows buyer demand has come out of negative territory for the first time this year. However, sales activity remains down.
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Tarrant Parsons, head of market research and analysis for RICS, said: “The UK residential market appears to be entering a more settled phase, with demand showing signs of stabilising following a period of volatility.
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“The earlier distortion caused by transactions being brought forward ahead of the stamp duty changes now appears to have largely dissipated, allowing underlying trends to re-emerge.
RICS regularly polls its members each month to get a sense of the housing market mood, and generates a percentage balance figure based on whether indicators such as house prices and sales are rising or falling.
The data can be more accurate than a house price index as it is reflects work being done at the coalface of the market, not just mortgage approvals or asking prices.
The latest findings suggest signs of stabilisation in the sales market, although challenges persist for both buyers and sellers, RICS said.
Buyer demand has moved out of negative territory for the first time since December 2024, with the net balance for new buyer enquiries rising to +3% in June.
This was a noticeable improvement from the -22% reported in May.
The national net balance for agreed sales improved, falling to -3%, from the -25% and -28% reported in earlier surveys.
The report shows near-term expectations for sales volumes have turned marginally positive, with a net balance of +6% expecting more activity in the next three months compared with the -2% recorded in May. However, respondents are predicting a broadly flat landscape for sales volumes over the next 12 months, with a net balance of +5%.
New instructions to sell have also seen a slight decline, with the June net balance dropping to +3% from +7% in May. While this signals a slowdown in the flow of new listings, 16% of respondents reported an increase in market appraisals compared with the same period last year, indicating that supply levels remain relatively healthy, RICS said.
Parsons added: “Encouragingly, near-term sales expectations have begun to edge higher, pointing to a modest shift in sentiment. That said, confidence in the market remains somewhat delicate, with economic uncertainty at both the domestic and global level still seen as a potential headwind.”
Will house prices rise in 2025?
Higher stamp duty costs are expected to keep house price growth low, although mortgage rate cuts - helped by further falls in the base rate - could also boost demand and push up prices.
Nationally, the RICS report suggests house prices continue to follow a flat to marginally negative trend, with the net balance for June remaining at -7%.
Respondents were also negative about house price growth for the next three months but the 12 month outlook looks better with 24% of survey participants anticipating price increases.
The latest Halifax House Price Index for June suggests house price growth was flat on a monthly basis compared with a 0.3% dip in May, while annual price inflation slowed from 2.6% to 2.5%.
Average prices were down by 0.3% on a quarterly basis, Halifax said.
House price growth predictions for 2025 range from 4% according to Savills to 3.5% based on Knight Frank predictions.
Tom Bill, head of UK residential research at Knight Frank, said “Demand is recovering after the March stamp duty deadline meant transactions were pulled forward into the first quarter of the year.
“However, as buyers return, they have a lot of stock to choose from, which is putting downwards pressure on prices.
“Rate cut expectations have grown over the last six weeks due to weak UK economic data, which should support demand over the second half of the year and produce modest single-digit price growth in 2025. A re-run of last year’s game of ‘guess the tax rise’ ahead of the Budget is the biggest risk for sentiment.”
