RICS: Following the stamp duty shock, homebuyers are coming back

Since stamp duty thresholds were lowered in April, the housing market has been muted, but there are indications that it is starting to rebound

According to recent data from the Royal Institute of Chartered Surveyors (RICS), buyers are now returning to the market following stamp duty changes in April, suggesting that the housing market may be on the verge of recovery.

Since stamp duty thresholds were lowered in April, surveyors have noted a lackluster demand, which has increased the cost of purchasing real estate and slowed the growth of home prices.

For the first time this year, however, buyer demand has emerged from negative territory, according to the most recent UK Residential Market Survey published by RICS in June 2025. Sales activity, though, is still down.

"The UK residential market looks to be entering a more settled phase, with demand showing signs of stabilizing following a period of volatility," stated Tarrant Parsons, head of market research and analysis for RICS.

"Underlying trends seem to have resurfaced as a result of the earlier distortion brought about by transactions being brought forward ahead of the stamp duty changes.

How is the real estate market doing?

Every month, RICS conducts a survey of its members to gauge the state of the housing market. The survey then determines whether indicators like sales and prices of homes are increasing or decreasing to produce a percentage balance figure.

Because it includes work being done at the coalface of the market, not just mortgage approvals or asking prices, the data may be more accurate than a house price index.

Despite ongoing difficulties for both buyers and sellers, the most recent data points to indications of stabilization in the sales market, according to RICS.

With the net balance for new buyer inquiries increasing to +3 percent in June, buyer demand has finally left negative territory for the first time since December 2024.

Compared with the -22 percent recorded in May, this represented a discernible improvement.

In contrast to the -25 and -28 percent recorded in previous surveys, the national net balance for agreed sales improved, dropping to -3 percent.

According to the report, short-term sales volume expectations have slightly improved, with a net balance of +6% anticipating higher activity over the next three months as opposed to -2 percent in May. In contrast, respondents anticipate a net balance of +5 percent and a generally flat sales volume landscape over the next 12 months.

There has also been a minor decrease in new sell orders, as the June net balance fell to +3 percent from +7 percent in May. Although this suggests that the number of new listings is slowing down, 16 percent of respondents said that market appraisals were higher than they were during the same time last year, suggesting that supply levels are still comparatively stable, according to RICS.

"It is encouraging that near-term sales expectations have started to rise, suggesting a slight change in sentiment," Parsons continued. However, market confidence is still a little shaky, and both domestic and international economic uncertainty are still viewed as possible obstacles.

Will 2025 see an increase in home prices?

It is anticipated that higher stamp duty rates will limit the growth of home prices, but mortgage rate reductions, aided by additional base rate declines, may also increase demand and drive up prices.

With the June net balance at -7 percent, the RICS report indicates that house prices nationwide are still on a flat to slightly negative trend.

In addition, respondents expressed a negative outlook for the next three months' growth in home prices; however, the 12-month outlook appears more promising, with 24% of survey respondents expecting price increases.

While annual price inflation slowed from 2 percent to 2 percent, the most recent Halifax House Price Index for June indicates that monthly house price growth was flat after a 0 percent decline in May.

According to Halifax, average prices fell by 0.3 percent on a quarterly basis.

Savills projects a 4 percent increase in house prices in 2025, while Knight Frank projects a 3 to 5 percent increase.

According to Knight Frank's head of UK residential research, Tom Bill, "Demand is rebounding after transactions were pushed forward into the first quarter of the year due to the stamp duty deadline in March.

However, there is a lot of stock available to them when buyers return, which is driving down prices.

"Weak UK economic data, which should boost demand in the second half of the year and result in modest single-digit price growth in 2025, has raised rate cut expectations over the past six weeks. For sentiment, the biggest risk is a replay of the guess-the-tax-rise game from last year before the budget.