The UK property market experienced a slowdown in September as rising interest rate expectations dampened buyer confidence, according to the latest data from the Royal Institution of Chartered Surveyors (RICS).
The RICS Residential Market Survey recorded a decline in new buyer enquiries, with the net balance falling to -22% in September from -18% in August. This marked the first month since March where the indicator weakened, though it remained above the recent low of -41% recorded six months earlier.
Agreed sales also declined, with the net balance slipping to -18% from -16%, although this remained less negative than the three-month average of -25%. Expectations for sales over the next three months softened, with the net balance falling to -6% from -3%.
Price pressures intensify
House prices faced increased downward pressure during September. The headline house price net balance fell to -32% from -28% in August, ending four consecutive months of improvement.
Regional variations remained pronounced across the country. Most parts of England reported more negative price balances in September, with London performing notably weaker than the national average. Northern Ireland continued to see price rises, while Scotland recorded modest price growth.
The three-month house price expectations balance stood at -24%, indicating further near-term pressure. However, the 12-month horizon balance was zero, suggesting respondents expect broadly flat house prices over the coming year.
Supply shows tentative improvement
There were early signs of increased supply entering the market. The balance for new sales instructions moved to +6%, the first positive reading since mid-2025. However, respondents indicated that market appraisal activity remained below levels seen a year earlier, suggesting homeowners remain cautious about entering the market.
Rental market divergence
The lettings market showed contrasting dynamics, with tenant demand continuing to rise while landlord supply remained constrained. A net balance of +23% of respondents reported an increase in tenant demand during the month, the third consecutive monthly acceleration.
Landlord instructions remained firmly in negative territory, contributing to expectations of further rental growth. A net balance of +37% of contributors expects rents to rise over the next three months. While down from +44% in August, this remained well above the +27% average recorded during the first half of 2026.
Tarrant Parsons, RICS Head of Market Research and Analysis, said: “A renewed rise in interest rate expectations has created a fresh headwind for the housing market, with buyers becoming a little more cautious and sales activity losing some momentum this month.”
He added: “Even so, the latest results do not point to any significant shift in direction. Rather, they suggest the market may need to contend with a somewhat longer period of subdued activity as households adjust to the prospect of borrowing costs remaining higher than previously anticipated.”
The findings indicate that the UK property market is entering a period of adjustment as buyers and sellers recalibrate expectations around interest rates. While the data does not suggest a sharp downturn, the sector appears set for continued subdued activity in the near term, with rental market pressures continuing to build amid constrained supply.
