UK housing market activity is likely to be subdued this spring as global economic uncertainty and fragile buyer sentiment continue to weigh on confidence, according to Lucian Cook, head of residential research at Savills.
Cook said recent developments in global trade – including escalating tariffs between the US and China – have added to concerns around wealth generation and financial stability, particularly at the top end of the market.
“It is still highly likely, if not inevitable, that there will be an impact on consumer confidence,” he said, pointing to fresh data from the RICS Residential Market Survey, which reported a sharp fall in buyer enquiries in March. The balance of opinion fell to -32, down from modest positive territory seen in the latter half of 2023.
Cook said this shift is expected to drive greater price sensitivity, particularly among higher-value homes, following recent stock market volatility and uncertainty over potential tax changes.
“This suggests we are set for more price sensitivity over the next 90 days, particularly at the top end of the housing market,” he said. In the short term, the market is likely to remain “needs-based”, led by committed buyers and sellers, with continued demand for “best in class” properties.
Despite the short-term caution, Cook said the relative security of UK property may attract opportunistic and safe haven investment, particularly as mortgage markets become more competitive and interest rates are expected to fall over the summer.
“We continue to expect interest rates to fall… gradually bringing more buyers into the market and underpinning prices over the medium term,” he added.
However, the economic uncertainty also makes it harder for the government to meet its housing delivery targets, according to Cook, increasing pressure for targeted support for first-time buyers and affordable housing providers.
“That brings us back full circle to politics, albeit of a more domestic nature,” he wrote.
