Demand from homebuyers dropped dramatically last month to the weakest position for 18 months, according to the latest RICS survey.

RICS says new buyer demand slipped to a net balance of -32% in March, down from a reading of -16% overall the previous month.

Weakest

This result marks the weakest ‘demand sentiment’ since September 2023.

And for agreed sales, the March net balance of -16% represents a slight further deterioration from -13% returned in the previous survey.

The initial rush to complete sales before the 1 April Stamp Duty deadline slowed down towards the end of March, according to respondents. And three-month sales expectations point to a further dip in activity over the near term.

Sales rise

But looking further ahead, the outlook is not as downbeat, with a net balance of +11% of survey participants expecting sales volumes to rise.

The survey’s headline measure for ‘house price sentiment’ showed a net balance of +2% this month, easing from +20% and +11% in January and February.

According to the Latest Halifax HPI, released earlier this week, average house prices were down by -0.5% in March, a drop of £1,575.

Looking to next month, the impact on the property market from newly-imposed US global tariffs and potential tariff responses by other nations, may stimulate further uncertainty, RICS says.

Trade war

Simon Rubinsohn, Chief Economist at RICS (The Royal Institution of Chartered Surveyors), says: “The expiry of the stamp duty break was always going to lead to a pause in activity in the sales market.

“Looking forward, the impact on the market will in no small part depend on how the economy is affected by the emerging trade war, and the response of the Bank of England to the shifting environment.”

Industry reaction

Tom Bill, Head of UK Residential Research at Knight Frank, says: “As buyers adapt to higher rates of stamp duty from this month, they also face headlines about a global recession sparked by US tariffs.

“While that may not be conducive to positive sentiment, the good news is that markets now expect the Bank of England to cut rates three times this year rather than two to deal with a possible economic slowdown.”

Tomer Aboody, Director of specialist lender MT Finance, says: “We are seeing a slowdown in the market which correlates with the stamp duty changes, as well as further negative feelings within the macro and UK economic climate.

“This further proves that some assistance from the government is needed in order to stimulate growth.

“Hitting the UK with higher taxes, higher stamp duty along with businesses taking further hits from the October budget, has provided so much uncertainty and this slowdown. Let’s hope there are some positive changes to come.”

Not surprisingly buyer enthusiasm in our offices has waned a little recently

Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “Not surprisingly buyer enthusiasm in our offices has waned a little recently given widespread economic uncertainty and the number of moves which were advanced in the last month or so to take advantage of the stamp duty concession.

“However, lack of appropriately-priced houses in particular, in some of our more popular areas, is helping maintain values as well as the prospect of perhaps mortgage rates falling further and faster than previously anticipated,” he says.

“Certainly, we have not seen evidence of widespread withdrawals from transactions or heavy renegotiations with most buyers and sellers adopting a wait-and-see attitude in the hope that markets calm down in the not-too-distant future.”