The August 2025 RICS Residential Market Survey has revealed a further weakening in sales market activity, with both new buyer enquiries and agreed sales in decline, while the rental sector continues to face acute supply constraints.
The net balance for new buyer enquiries slipped to -17% in August, compared with -7% the previous month, signalling a more pronounced fall in demand. Agreed sales also dropped more sharply, with a net balance of -24% against -17% in July.
Respondents now expect broadly flat activity in the next three months, while sentiment for the year ahead has dipped to its lowest level since late 2023.
HOUSE PRICE PRESSURE
House prices are now under modest downward pressure nationally, with the headline price balance deteriorating to -19%. Regional divergences remain stark, with East Anglia and the South West reporting significant falls, while Northern Ireland continues to record rising prices.
On the supply side, vendor instructions weakened for the first time since mid-2024, posting a net balance of -3%. Market appraisals also fell slightly on the year.
RENTAL DEMAND
In the rental sector, demand remained broadly unchanged but landlord instructions fell sharply, with a net balance of -37% – the weakest reading since April 2020. Rental price expectations remain firmly positive, with surveyors forecasting 3% annual growth.
Jeremy Leaf, north London estate agent and former RICS chairman, said: “Demand is weakening but we have continued to agree sales of houses in particular over the past few weeks during and since the summer holidays.
“However, quality is trumping quantity in terms of viewing numbers. On the other hand, flats are proving more challenging to sell mainly due to the amount of choice.”
Tomer Aboody, director at MT Finance, highlighted the role of fiscal uncertainty: “The threat of further taxes on the way is having a big effect both on the sales and rental sectors.
“With a limited amount of buyers, sellers are needing to reduce pricing in order to attract those willing to commit, whereas the opposite is happening in the rental market, as rents increase due to fewer buy-to-let landlords as they exit the sector.”
“Policymakers must consider the long-term impact of regulation and taxation on landlord confidence and behaviour”
Russell Anderson, commercial director of mortgages at Paragon Bank, added: “A decline in landlord instructions noted by surveyors is further evidence that supply is failing to meet the continuing demand for privately rented homes.
“Policymakers must consider the long-term impact of regulation and taxation on landlord confidence and behaviour.
“A balanced approach that protects tenant rights while encouraging responsible investment is essential if we’re to see a healthier, more sustainable rental market.”
