Sales activity in the housing market softened slightly in February 2025, with new buyer enquiries and agreed sales turning mildly negative, according to the latest RICS UK Residential Survey. Despite this slowdown, house prices continue to rise at a national level, and long-term sales and rental market prospects remain positive — creating opportunities for landlords and property investors.
Buyer demand dips ahead of stamp duty deadline
The February 2025 RICS UK Residential Survey indicated a modest slowdown across the sales market, with a net balance reading of -14% for new buyer enquiries — down from -1% in January. This marks the weakest result for buyer demand since November 2023. The decline is partly attributed to buyers rushing to complete transactions before the stamp duty threshold reduction takes effect on 1st April 2025.
Similarly, newly agreed sales dipped into negative territory, with a net balance of -13% compared to +2% in January. This is the lowest figure recorded since May 2024. London saw a particularly sharp drop in agreed sales in February, reflecting the capital’s greater sensitivity to economic pressures and shifting buyer confidence.
Despite this short-term slowdown, sentiment towards the longer-term sales outlook remains positive. The net balance for 12-month sales expectations stands at +32% — indicating that most market participants expect sales activity to pick up over the coming year.
House prices holding steady despite lower activity
House prices remain on an upward trajectory, albeit at a slower pace. The aggregate net balance for house prices in February stood at +11%, consistent with a modest upturn. However, this represents a clear moderation from December (+25%) and January (+21%), suggesting that price growth is cooling after a period of stronger gains.
Northern Ireland, Scotland, and the North West of England bucked the wider trend, with prices continuing to rise strongly in these regions. On the whole, however, market participants remain confident that house prices will increase over the next year, with the net balance for 12-month price expectations holding firm at +47% — consistent with the average recorded over the past six months.
Emma Cox, Managing Director of Real Estate at Shawbrook, noted that while market activity softened in February, the longer-term outlook for sales and rentals remains robust.
“February saw a slight dip in market activity, reflecting an unexpected drop in demand — despite first-time buyers rushing to complete purchases before the stamp duty exemption ends in March.”
“However, the sales outlook remains positive over the next 12 months, and while the Government’s housebuilding targets will take time to deliver, rental demand continues to far exceed supply.”
Strong rental yields offer opportunities for landlords
The lettings market has shown mixed results, with tenant demand slightly negative for the fourth consecutive month. The net balance for tenant demand came in at -4% in February — the longest stretch without a positive reading since the dataset began in 2012.
At the same time, landlord instructions remain weak, with a net balance of -22% — highlighting a shortage of rental stock. Despite this subdued backdrop, landlords have reason to be optimistic. A net balance of +34% of survey respondents expect rental prices to increase over the next three months — up from +18% in January.
Cox emphasised that this presents a strategic opening for experienced landlords and property investors:
“For seasoned portfolio investors, this presents a strategic opportunity. High-quality, energy-efficient homes remain in short supply, particularly in prime locations and high-yield rental sectors.”
“Those with the scale and expertise to expand or optimise their portfolios should focus on properties that meet tightening EPC requirements and cater to renters seeking premium, well-managed homes.”
Steady outlook despite near-term caution
With the Spring Statement approaching, Cox noted that investors will be watching closely for supportive policies.
“Investors will be watching closely, hoping for policies that support long-term property investment rather than additional regulatory burdens. Now is the time to reassess portfolio strategies — securing competitive lending terms, ensuring compliance with evolving regulations, and positioning assets for strong returns in a shifting market.”
While the short-term outlook for sales activity remains cautious, the broader picture is one of stability and opportunity for landlords. Consistent house price growth and strong rental yields continue to make the UK property market an attractive prospect for investors.
