Surveyors are reporting the clearest signs yet that the housing slowdown may be bottoming out, with buyer demand, agreed sales and price expectations all moving in a more positive direction.
The latest RICS UK Residential Market Survey for January shows activity is still subdued, but the pace of decline is easing and sentiment for the year ahead has strengthened significantly.
New buyer enquiries improved for the third consecutive month, with the net balance rising to -15%, up from -21% in December and -29% in November. Agreed sales followed the same pattern, posting a net balance of -9% – the least negative reading since June 2025.
House prices at a national level appear to have stabilised. The net balance for prices over the past three months came in at -10%, a steady improvement from -19% in October. While still technically negative, the data suggests downward pressure is moderating.
REGIONAL VARIATIONS
Regionally, the picture remains split. Scotland and Northern Ireland continue to outperform, with the North West and North of England also showing resilience. London, the South East and South West remain weaker due to affordability constraints, although even these regions reported modest improvement.
Sales expectations over the next 12 months surged to a net balance of +35% – the strongest reading since December 2024 – while +43% of respondents expect prices to rise over the coming year, marking the most positive outlook since February 2025.
In the rental market, tenant demand edged higher after two flat quarters, but landlord instructions remain firmly negative, pointing to continued upward pressure on rents.
GRADUAL RECOVERY
Simon Rubinsohn, chief economist at RICS, said: “There are early signs that market conditions may be improving after a challenging period, although activity levels are still subdued, meaning any recovery is likely to be gradual.
“While the strengthening twelve-month outlook is encouraging, near-term expectations remain relatively soft, reflecting ongoing economic uncertainty. Whether this tentative improvement develops into sustained momentum will depend heavily on the trajectory of mortgage rates and broader macro confidence over the coming months.”
VISIBLE RECOVERY
Tomer Aboody, director of specialist lender MT Finance, added: “With an increase in the number of buyers registering with agents, we are hopeful of a market recovery, although this is likely to be gradual.
“With interest rates at more affordable levels than was the case 12 to 24 months ago, buyers are more keen on moving and taking advantage of cheaper borrowing.
“While the London market is lagging behind the rest of the country due to high house prices and the prospect of a mansion tax as proposed by the Chancellor, some recovery is still visible with buyers on the whole willing to swallow the extra tax while some are perhaps hopeful that the next government will abolish it.”
