Forward-looking indicators show improved confidence in sales volumes and values
The UK housing market ended 2025 in muted fashion, but sentiment has begun to improve, with expectations for transactions and prices turning more positive, according to the latest UK Residential Market Survey from the Royal Institution of Chartered Surveyors (RICS).
The December report indicated that both buyer interest and agreed sales remained negative on balance, extending the subdued conditions seen through much of last year. New buyer enquiries recorded a net balance of -24%, while agreed sales stood at -19%. Although still weak, both indicators were less negative than in November, suggesting that the slowdown may be starting to bottom out.
Forward-looking measures were notably stronger. Sales expectations over the next three months rose to a net balance of +22%, the highest reading since October 2024. On a 12‑month view, sentiment strengthened further, with a net balance of +34% of respondents anticipating higher sales volumes, more than double November’s level. Surveyors attributed the improved outlook in part to lower interest rate expectations and the fading impact of Budget-related uncertainty.
On the supply side, new instructions from vendors stabilised, with a net balance of 0% in December, ending a run of declines. However, appraisal activity remains limited, indicating that any meaningful increase in available stock is likely to emerge only gradually.
House prices continued to soften at the national level, with a net balance of -14%. The pace of decline appears to be easing, but regional differences remain pronounced. London (-42%) and the South East (-32%) saw more marked price falls, while Scotland and Northern Ireland continued to report growth.
Short‑term price expectations are now close to flat, and a net balance of +35% of respondents expects prices to rise over the next year, the most positive reading since late 2024.
Conditions in the lettings market remain tight. Tenant demand weakened further in December, with a net balance of -27%, while new landlord instructions stayed firmly negative at -39%, highlighting ongoing supply constraints. Respondents expect rents to continue to increase, with average rental growth of around 3% forecast over the next 12 months.
“The UK residential market remains in a prolonged soft patch, with December’s survey recording a sixth consecutive month of negative momentum in buyer enquiries,” said Tarrant Parsons (pictured right), head of market research and analysis at RICS.
“That said, there are tentative signs of a shift in sentiment beneath the surface. Near-term sales expectations have strengthened, and the twelve-month outlook has edged into more positive territory.
“The key test for 2026 will be whether borrowing costs ease on a sustained basis. If so, this could provide the catalyst needed to drive a recovery in buyer demand.”
For Tomer Aboody, director at specialist lender MT Finance, there clearly is a buoyant mood in the housing market with good activity from buyers and sellers alike.
“As we continue to digest the Budget, many are coming to terms with the current situation and choosing to make their move,” he said.
“With the prospect of further rate reductions, we are hoping to see increased activity in the form of more transactions as the year pans out.”
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