The UK housing market showed little change in January 2025, with sales activity remaining steady and buyer demand easing slightly, according to the latest RICS Residential Market Survey.
While momentum has slowed in recent months, expectations for a modest increase in sales volumes remain positive for the year ahead.
STABLE DEMAND AND SALES ACTIVITY
The survey’s measure of new buyer enquiries returned a neutral net balance of 0%, indicating no overall change in demand during the month. This marks a gradual moderation from a recent high of +16% in August 2024, suggesting that demand growth has softened.
Similarly, agreed sales held relatively steady, with a net balance of +3% compared to +7% in December. Near-term sales expectations remain slightly optimistic, with a net balance of +10% of respondents anticipating an increase in transactions. Over the next 12 months, confidence remains stronger, with a net balance of +30% of contributors forecasting higher sales activity, though this is slightly lower than the +37% recorded in the previous survey.
INCREASE IN PROPERTY LISTINGS
The number of new instructions continued to rise in January, with a net balance of +25% of respondents reporting an increase in new listings. This marks the ninth consecutive month of growth, reflecting a more consistent flow of properties coming to market.
Estate agents have also seen an improvement in average inventory levels, rising from 41 to 45 properties per branch since July 2024. While stock levels remain historically low, the increase suggests more choice for buyers. Additionally, market appraisals—an indicator of future listings—have strengthened, with a net balance of +24% of survey participants reporting an increase compared to a neutral reading of -4% in the previous report.
HOUSE PRICES CONTINUE TO RISE
A net balance of +22% of respondents reported rising house prices in January, down slightly from +26% in December but still pointing to a general upward trend. The strongest price growth was recorded in Northern Ireland and the North West of England, while Yorkshire & the Humber and the South East saw more modest increases.
Looking ahead, price expectations have flattened in the short term, with the three-month outlook dropping to +3% from +14% previously. However, confidence remains high for the longer term, with a net balance of +52% of contributors expecting house prices to rise over the next year. Every region of the UK is predicted to see further price growth in 2025.
RENTAL MARKET SHOWING SIGNS OF SLOWDOWN
The lettings market saw a slowdown in tenant demand, with the net balance slipping to +2% from +18% in the previous quarter. This suggests a more stagnant trend in rental activity. Meanwhile, landlord instructions continued to decline, with a net balance of -19%, continuing a long-term trend of falling supply.
While demand appears to have eased, expectations for rent increases remain, albeit at a slower pace. A net balance of +23% of respondents anticipate higher rents in the near term, down from +32% in the previous survey.
OUTLOOK FOR 2025
Despite signs of stabilisation in demand and sales, the housing market is expected to see gradual growth in activity and prices over the next year. The increase in new listings could provide more opportunities for buyers, while longer-term price expectations remain strong. In the rental market, a continued shortage of supply is likely to keep upward pressure on rents, though tenant demand has softened.
The survey indicates that while the market is not experiencing rapid growth, it remains resilient with steady expectations for the months ahead.
Tomer Aboody, director of specialist lender MT Finance, said: “With February’s anticipated rate cut coming to fruition, lenders will be cutting their mortgage rates in order to entice new business. A more confident and busy market should follow, as borrowers take advantage of lower mortgage rates and in turn, better affordability.
“Unfortunately, with the end of the stamp duty holiday in sight, any uplift in volumes could be hit just as the market is picking up.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, added: “The RICS survey is historically reliable in terms of market sentiment and the best lead indicator of market change.
“In our offices, demand, listings, sales agreed and prices continued an upwards, but slower-than-expected trend in January. However, affordability is still the elephant in the room, resulting in buyer caution, sensitive pricing and protracted negotiations. Many buyers and sellers have been awaiting a further rate cut, which came earlier this month, and are hoping that this will result in lower rates.
“As far as lettings are concerned, many tenants are trying as hard as possible to take advantage of an improved bargaining position. However, lack of stock is helping underpin rents through demand for smaller flats in particular has continued unabated.”
