The latest Royal Institution of Chartered Surveyors (RICS) survey reveals the UK housing market is declining more sharply than at any point since mid-2023. Buyer demand, sales activity, and price expectations have all turned negative, marking a significant downturn.
Respondents to the survey cited higher mortgage rates in October as the main reason for reduced buyer interest. The net balance of agreed sales dropped to -24%, the lowest figure in three months, while expectations for the next 12 months fell to -17%, the most pessimistic outlook since July 2023. The three-month sales forecast also remained negative at -11%, indicating no immediate improvement.
Price expectations have followed a similar downward trend. The balance for near-term price changes fell to -36%, worsening for the second consecutive month, while the 12-month outlook declined to -17% from a neutral position. Separate estimates suggest prices could decrease by around 1% over the coming year.
The number of homes entering the market has also slowed. New listings dropped to a net balance of -8%, reversing a previous increase, while the market appraisals indicator hit -34%, its lowest level since November 2025. This suggests the supply pipeline may shrink further in the near future.
The rental market is experiencing strain as well. Tenant demand has returned to modest growth, with a net balance of +7%—up from -1%, while landlord instructions fell sharply to -30%. This imbalance has pushed rental growth expectations up to +41% over the next three months, the highest level since early 2024. Eight UK regions are now reporting worsening rental affordability.
Economic uncertainty is the primary factor driving these changes. Tarrant Parsons, RICS Head of Market Research, explained that the Bank of England’s recent rate hike, combined with warnings of further tightening, has kept mortgage rates raised. With inflation projected to remain near 5% next year, rates are unlikely to ease soon, maintaining pressure on buyers.
Tom Bill, head of UK residential research at Knight Frank, highlighted external factors influencing the market. Rising mortgage rates, he noted, reflect broader economic pressures, including the energy price shock tied to the Middle East conflict. These developments have directly reduced sales volumes and weighed on prices throughout 2024.
Jeremy Leaf, a north London estate agent and former RICS residential chairman, shared concerns about the outlook. 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.