Buyer demand, sales and instructions weaken while London prices fall fastest
Housing activity remained subdued in the wake of the government’s Autumn Budget, with the latest RICS UK Residential Market Survey showing measures of buyer interest and sales volumes still firmly negative.
Contributors to the survey reported that uncertainty ahead of the fiscal event and extensive media coverage of potential tax changes weighed on sentiment. Respondents also noted that the final decision to apply the High Value Council Tax Surcharge only to properties valued above £2 million provided some relief at the top end of the market.
Agents who took part in the survey largely expect any meaningful recovery in activity to be delayed until spring 2026, rather than materialising in the short term.
Buyer demand and agreed sales remain under pressure
New buyer enquiries registered a net balance of -32% in November, compared with -24% in October, the weakest reading since late 2023. This indicates that more agents continue to report falling, rather than rising, buyer demand.
Agreed sales were also negative, with a net balance reading of -23% in November, only marginally different from -24% in October. This points to an ongoing downward trend in completed transactions rather than a sharp change in market direction.
Short‑term expectations for sales over the next three months softened slightly to a net balance of -6%, from -3% previously, suggesting broadly flat activity over the winter period. Over a 12‑month horizon, however, a net balance of +15% of respondents expect sales volumes to increase, up from +7% the month before, implying some cautious optimism that market conditions could improve through 2026.
Instructions and appraisals signal a thin pipeline
The headline net balance for new sales instructions came in at -19% in November, close to October’s -20%. This indicates that the flow of properties coming to market is still slowing, limiting choice for potential purchasers.
Survey participants also pointed to weaker appraisal activity. The net balance for market appraisals compared with a year earlier fell to -40%, marking the fourth consecutive month of decline. This suggests that the pipeline for future instructions is likely to remain restricted in the near term, with fewer would‑be vendors preparing to list their properties.
London prices underperform due to mansion tax
At the UK level, house prices continued to edge down. The aggregate net balance for achieved prices stood at -16% in November, indicating that more agents reported falls rather than rises.
London showed the most negative reading, with a net balance of -44%, weaker than any other UK region. Respondents linked this in part to the High Valuation Council Tax Surcharge – widely described as a “mansion tax” – which they said had weighed on higher‑value homes in the capital.
By contrast, contributors in Northern Ireland and Scotland reported rising prices, highlighting regional variation in market conditions.
Near‑term expectations for prices were little changed, with a national net balance of -15% (from -12% previously). Over the next year, the expectations series rose to a net balance of +24%, the strongest reading since June, suggesting that more respondents anticipate prices will begin to move higher again over the course of 2026.
“The housing market has been struggling for momentum for several months, and the recent Budget announcements are unlikely to materially shift that picture,” said Simon Rubinsohn (pictured right), chief economist at RICS. “The ending of Budget-related uncertainty is welcome, but the fundamental challenges of affordability and elevated borrowing costs will in all probability keep activity subdued in the near term.
“That said, the twelve-month outlook has brightened somewhat, likely reflecting a growing sense that the Bank of England may have a little more scope to reduce interest rates than seemed plausible only a short while ago.”
Landlord instructions fall and tenant demand cools
In the lettings market, survey feedback pointed to continued weakness in new landlord instructions. The net balance remained deeply negative at -39%, with respondents flagging the new income tax on property announced in the Budget as a factor that could discourage additional rental stock from coming forward.
Tenant demand also softened. The net balance for tenant enquiries slipped to -22%, the lowest figure since April 2020. While some of this decline is likely to reflect seasonal factors – the RICS lettings series is not adjusted for seasonality – feedback suggested a broader cooling in demand alongside affordability constraints.
Near‑term rental price expectations stood at a net balance of +6%, implying only modest increases in advertised rents over the next three months and representing the flattest projection since the early stages of the pandemic. Over a 12‑month period, respondents forecast a 2.5% rise in rents, only slightly below the average expectation of around 3% recorded over the past six months.
The survey concludes that both the sales and lettings markets are likely to remain subdued until early 2026, when seasonal factors typically become more supportive.
“Although tenant demand does appear to be softening, the lack of stock is keeping rental expectations elevated and the additional tax levied on landlords in the Budget will likely exacerbate this trend,” Rubinsohn said.
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