The outlook for UK housing sales has deteriorated to its weakest level since July 2023, according to the latest Royal Institution of Chartered Surveyors (RICS) UK Residential Market Survey.
RICS members reported that rising mortgage rates in October dampened buyer demand, leading to a decline in agreed sales and increased downward pressure on house prices. Survey respondents anticipate both sales activity and prices will soften over the next 12 months.
Demand and sales metrics decline
The new buyer enquiries indicator held steady at a net balance of -24%, unchanged from September, with nearly all UK regions reporting either falling or stagnant demand. The agreed sales balance deteriorated to -24% from -18%, marking its weakest reading in three months.
Looking forward, 12-month sales expectations fell to a net balance of -17%, the most pessimistic assessment since July 2023. Expectations for the next three months also remained negative at -11%.
Price forecasts revised downward
House price expectations for the next three months continued to decline, with the headline balance falling to -36% from -34%. This marks the second consecutive monthly deterioration following signs of stabilisation over the summer.
Respondents also revised down their expectations for the year ahead. The 12-month price expectations balance fell to -17% from zero, with separate percentage estimates pointing to a modest decline of around 1%.
The flow of homes entering the sales market has also weakened. New instructions slipped to a net balance of -8% from +6% previously, while the market appraisals indicator fell to -34%, its lowest since November 2025. These figures suggest the pipeline of new listings could slow further in coming months.
Rental market pressures intensify
In the lettings market, pressure on rents strengthened as tenant demand returned to modest growth while landlord instructions continued to fall. The trend contrasts with worsening rental affordability across eight UK regions. On the quarterly, seasonally adjusted measure, tenant demand rose to a net balance of +7% from -1%, while landlord instructions registered -30%.
Against this backdrop, expectations for rental growth over the next three months climbed to +41% from +29%, their strongest reading since early 2024.
Tarrant Parsons, RICS Head of Market Research and Analysis, said: “Home buyer demand remains subdued, and respondents are bracing for a weaker year ahead for sales given the persistent macroeconomic challenges being faced.”
He added: “The Bank of England’s rate rise was accompanied by a clear warning that policy may need to tighten further if higher energy costs feed through into wider prices. With inflation now projected to approach 5% next year, mortgage rates are likely to remain elevated for longer, thereby continuing to weigh on the market.”
Industry perspectives
Tom Bill, head of UK residential research at Knight Frank, noted: “The latest slump in confidence shows how decisions in Washington not Westminster are shaping the outlook for the UK housing market. Rising mortgage rates have put downward pressure on sales volumes and prices this year due to the energy price shock caused by the Middle East conflict.”
Jeremy Leaf, north London estate agent and former RICS residential chairman, said: “Of more concern with these figures, confirmed by what we’re seeing in our offices, is the lack of near-term expectation of improvement. If anything, the most significant influencers of confidence – mortgage rates and the cost of living – are likely to get worse before they improve.”
However, Leaf noted some positive developments: “We are finding the bad news does seem to have brought more realism to some sellers who appreciate this is as good as it gets – at least for a while.”
The survey results indicate a challenging period ahead for the UK housing market, with elevated mortgage rates and macroeconomic uncertainty continuing to constrain both buyer demand and sales activity. The rental sector appears set to face ongoing pressure from the imbalance between rising tenant demand and declining landlord supply.
