Housing confidence lifts despite weak year-end activity

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The UK housing market ended 2025 on a subdued footing but confidence is rebounding as expectations for sales and prices turn decisively more positive heading into 2026, according to the latest survey from the Royal Institution of Chartered Surveyors.

RICS said buyer demand and agreed sales remained in negative territory in December, underscoring the softness that has characterised much of the past year.

New buyer enquiries registered a net balance of -24%, while agreed sales stood at -19%. Both readings, however, improved modestly on November, suggesting the downturn is beginning to lose momentum.

The clearest shift came in forward-looking indicators. Sales expectations over the next three months rose to a net balance of +22%, the strongest reading since October 2024.

EASING UNCERTAINTY

Looking 12 months ahead, sentiment strengthened further, with +34% of respondents expecting sales volumes to increase, more than double the level recorded a month earlier.

Surveyors attributed the improving mood to expectations of lower interest rates and the easing of uncertainty following the Autumn Budget.

Supply conditions showed signs of stabilisation. New vendor instructions flattened to a net balance of 0%, ending several months of decline.

While this points to a market that has stopped deteriorating, RICS says that subdued appraisal activity means any meaningful uplift in available stock is likely to emerge only gradually.

PRICES EDGING LOWER

House prices continued to edge lower at a national level, with a net balance of -14%, although the pace of decline is easing. Regional divergence remains pronounced.

London and the South East recorded the sharpest falls, with net balances of -42% and -32% respectively, while Scotland and Northern Ireland continued to see price growth.

Looking ahead, short-term price expectations have improved to broadly flat levels, and +35% of respondents now expect prices to rise over the next year — the most upbeat outlook since late 2024.

LETTINGS UNDER STRAIN

The lettings market remains under strain. Tenant demand weakened further in December, posting a net balance of -27%, while new landlord instructions stayed deeply negative at -39%, highlighting ongoing supply constraints.

Rents are expected to continue rising, with average growth forecast at around 3% over the coming year.

SOFT PATCH
Tarrant Parsons, RICS
Tarrant Parsons, RICS

Tarrant Parsons, RICS head of market research and analysis, said: “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.

“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.”

BOUYANT MOOD
Tomer Aboody, MT Finance
Tomer Aboody, MT Finance

Tomer Aboody, director of specialist lender MT Finance, says: “Whether it’s the new year boost or the reduction in base rate at the end of last year, there is a buoyant mood in the housing market with good activity from buyers and sellers alike, with more stock soon to come to the market.”

And he added: “As we continue to digest the Budget, many are coming to terms with the current situation and choosing to make their move.

“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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