The UK property sector is bracing for a further decline in activity, with confidence in sales hitting its lowest point since mid-2023, according to the Royal Institution of Chartered Surveyors (RICS) latest survey. The report highlights growing concerns across the residential market.
Weakened buyer interest, declining agreed sales, and downward pressure on property values are now widespread. Rising mortgage costs and economic uncertainty continue to dampen market sentiment significantly.
Survey results show a net balance of -17% for sales expectations over the coming year—the weakest reading in over three years. Even short-term projections remain pessimistic, with a -11% net balance suggesting further weakening in the next three months.
New buyer enquiries dropped to a net balance of -24% in October, matching September’s figures. Nearly every UK region reported either falling or stagnant demand. Meanwhile, agreed sales deteriorated further, with the net balance worsening to -24% from -18% the prior month. Fewer homeowners are listing properties, as new instructions fell to a net balance of -8%, reversing September’s +6% reading. Market appraisals also weakened, hitting -34%, their lowest since November 2025, suggesting a shrinking pipeline of available homes.
House Prices Decline Sharply
The survey also signals continued pressure on house prices, with the headline price balance declining to -36% from -34% in September. This marks the second consecutive monthly drop after a period of summer stability. London, the South East, East Anglia, and the West Midlands experienced particularly sharp declines, though Northern Ireland saw firm price growth. Scotland and the North West also reported modest increases.
Outlook for the next 12 months has darkened sharply, with the house price expectations balance shifting from neutral (0%) to -17%. Survey respondents anticipate a roughly 1% national decline in values.
While sales struggle, the rental sector is tightening. Tenant demand has returned to modest growth, with a quarterly net balance of +7% compared to -1% previously. However, landlord instructions remain deeply negative at -30%. The growing gap between demand and supply is fueling expectations of higher rents, with near-term rental expectations rising to +41%, the strongest reading since early 2024.
Economic Challenges Ahead
Tarrant Parsons, RICS head of market research and analysis, stated: “Home buyer demand remains subdued, and respondents anticipate a weaker sales year ahead due to ongoing economic challenges. The Bank of England’s latest rate hike included warnings that further tightening may be needed if rising energy costs spread to broader inflation. With inflation expected to near 5% next year, mortgage rates are likely to stay high for an extended period, further straining the market.”
Tom Bill, Knight Frank’s UK residential research lead, noted: “The recent confidence slump reflects how US policy, not UK decisions, is now shaping the UK housing market. Higher mortgage rates have already reduced sales and prices this year, largely due to the energy market disruption caused by the Middle East conflict.”
The Bank of England’s rate decision included a caution that additional tightening could occur if raised energy costs drive up inflation further. This could push mortgage rates even higher, making home purchases more challenging. The RICS survey offers critical insights for handling today’s housing market, helping stakeholders make informed choices.
