Calls Grow for Government Action as Housing Market Slows

Why It Matters

A stagnant market threatens construction activity, housing affordability and investor confidence, making timely policy action critical for economic stability.

Key Takeaways

• UK house prices rose 1.3% YoY to Jan 2026.
• Transactions fell ~20% month‑on‑month, per HMRC data.
• RSM urges stamp‑duty reform to aid first‑time buyers.
• Development viability threatened by regulatory costs and planning delays.
• Rental Reform Act deters landlords, reducing buy‑to‑let supply.

Pulse Analysis

The UK housing market is entering a period of uncertainty, with the latest House Price Index showing modest year‑over‑year gains but a monthly decline and a sharp 20% drop in transaction volume. These figures reflect broader macro‑economic headwinds: mortgage rates are climbing, inflation remains around 3%, and geopolitical tensions are keeping consumer confidence low. For potential homeowners, the combination of higher borrowing costs and stagnant price growth erodes purchasing power, especially for first‑time buyers who are already squeezed by rising living expenses.

RSM UK’s call for stamp‑duty reform or direct assistance to first‑time buyers taps into a policy debate that has resurfaced after previous temporary cuts failed to generate sustained demand. Reducing or restructuring stamp duty could lower upfront costs, making entry into the market more attainable and potentially reviving transaction volumes. Moreover, targeted subsidies or shared‑equity schemes could bridge the gap between wage growth and house prices, a mismatch highlighted by the firm’s analysis of static price trajectories amid rising wages.

Beyond buyer incentives, the report underscores structural challenges facing developers and landlords. Increased regulatory burdens, planning delays, and the Rental Reform Act’s punitive tax measures are curbing new construction and prompting landlords to exit the buy‑to‑let sector. If the government does not address these supply‑side constraints, the market may face a prolonged downturn, affecting construction jobs, regional economic growth, and the broader real‑estate investment landscape. Policymakers thus face a delicate balance: stimulate demand while ensuring development remains financially viable.