The UK housing market lost momentum in July as concerns over potential tax rises in the autumn budget and uncertainty about the pace of interest rate cuts weighed on buyer sentiment, according to the Royal Institution of Chartered Surveyors (RICS).
The RICS index of new buyer inquiries fell to -6% from +4% in June, indicating weaker demand. A separate measure tracking agreed sales dropped to -16% from -4%, suggesting a slowdown in completed purchases.
Survey respondents expect conditions to remain subdued in the short term, with a recovery in activity not anticipated for at least 12 months. Analysts said speculation about Chancellor Rachel Reeves’s fiscal plans and doubts over further rate cuts from the Bank of England had prompted buyers to delay decisions.
The flow of new rental instructions also fell sharply, with a net balance of 31% of respondents reporting fewer landlords bringing properties to market — the steepest decline since April 2020. Tenant demand was stable over the three months to July, but with supply tightening, RICS expects rents to continue rising in the near term.
Simon Rubinsohn, chief economist at RICS, said: “Uncertainty about the potential contents of the chancellor’s autumn budget is raising some concerns. Respondents continue to report that the market remains particularly price-sensitive.”
The Bank of England cut the base rate to 4% in August — its lowest since early 2023 — but the 5–4 split vote has fuelled doubts about the scope for further reductions this year.
Alec Harragin of Savills said high-end buyers were awaiting clarity: “All eyes are now on the autumn budget in anticipation of any further tax initiatives aimed at high-net-worth individuals. Buyer caution persists despite the potential for domestic demand to benefit from further interest rate cuts and easing mortgage costs.”
RICS said the rebound in demand earlier this year, following the reduction of the first-time buyer stamp duty threshold from £425,000 to £300,000 in April, had faded in July. Nationwide reported average house prices rose 0.6% in the month to £272,664, while HMRC data showed home sales climbed 13% in June to 93,530.
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Housing market slows as buyers await autumn budget tax decisions