The latest UK Residential Market Survey from the Royal Institution of Chartered Surveyors (RICS) highlights a continued cooling in housing market activity during August 2025.
Buyer demand, sales volumes, and new property listings are all showing signs of strain, as potential property taxes, amid speculation that the chancellor could announce new property taxes in her autumn budget.
Rachel Reeves is reportedly considering a tax on the sale of homes over £500,000 and the removal of the capital gains tax exemption on primary residences above £1.5m, among other possible changes, as the government explores ways to boost income for the government.
Key Highlights:
Buyer demand weakens again: Interest from prospective buyers declined for the second month in a row, with a net balance of -17% in August – down from -7% in July.
Sales activity slows: Agreed sales also saw a sharper downturn, falling to a net balance of -24%, compared to -17% the previous month. Survey respondents anticipate sales will remain flat over the coming quarter.
House prices under pressure: The headline price indicator slipped further to -19%, continuing the recent downward trend. Regional disparities were notable, with significant price drops in East Anglia (-64%) and the South West (-46%), while Northern Ireland remained an outlier, reporting rising prices.
Supply constraints reappear: New instructions from vendors edged lower to -3%, marking the first negative reading since June 2024. This suggests fewer new listings are coming onto the market.
Rental market tightens: The rental sector also faces growing pressures. Landlord instructions saw their steepest decline since April 2020, dropping by -37%. Meanwhile, tenant demand remains strong, prompting expectations of a 3% rise in rents over the next 12 months.
Outlook:
Looking ahead, market sentiment remains cautious. Respondents expect further softening in house prices over the next three months (net balance of -20%), with sales activity likely to remain subdued. Over the longer term, modest price growth is still expected, but outlooks have become more subdued compared to earlier in the year.
Tarrant Parsons, head of market research and analysis at RICS, said: “With buyer demand easing and agreed sales in decline, the housing market is clearly feeling the effects of ongoing uncertainty. Concerns over the wider economic and fiscal outlook, combined with questions around the future path of interest rates amid stubbornly high inflation, are weighing on sentiment at this time.“
Read the orginal article: https://propertyindustryeye.com/property-market-confidence-falls-further-as-potential-tax-hikes-loom/
