The UK housing and mortgage market continues to face uncertain conditions as geopolitical tensions and economic pressures weigh on buyer confidence, according to the latest Royal Institution of Chartered Surveyors (RICS) Residential Market Survey.

The February survey shows demand from prospective buyers weakened further, with the net balance for new buyer enquiries falling to -26%, down from -15% in January.

Sales activity also remained subdued, with agreed sales posting a net balance of -12%. Short-term expectations for transactions softened slightly, with the near-term outlook slipping to -2%.

Despite the weaker near-term picture, surveyors remain cautiously optimistic about activity over the next year. A net balance of +17% of respondents expect sales volumes to increase over the next 12 months.

HOUSE PRICES BROADLY FLAT

House price movements were broadly flat across the UK in February, with the headline price balance recorded at -12%. However, regional differences remain pronounced. London (-40%), the South East (-24%) and East Anglia (-26%) continue to report the greatest downward pressure on prices.

Looking ahead, short-term expectations for house prices have weakened, with the near-term balance dropping to -18% from -6% in January. Over a 12-month horizon, however, a net balance of +33% of surveyors still expect prices to rise modestly.

Supply conditions in the sales market remained largely stable. New instructions recorded a net balance of +2%, while market appraisals also remained broadly unchanged.

STEADY TENANT DEMAND

In the rental market, tenant demand was steady over the three months to February, but landlord instructions continued to fall sharply, with a net balance of -27%. With supply constrained, a net balance of +20% of respondents expect rents to increase over the coming three months.

Tarrant Parsons, Head of Market Research & Analytics at RICS, said: “February’s survey highlights renewed volatility in the market. While activity indicators at the start of the year suggested a tentative improvement, the deterioration in the geopolitical backdrop has clearly weighed on confidence.

“The recent rise in oil and energy prices has also increased the likelihood that mortgage rates will remain higher for longer.

“As a result, near-term expectations have softened. Although the twelve-month outlook remains positive overall, maintaining that trajectory will depend on the recent spike in inflationary pressures easing in the months ahead.”