There has been a notable rise in confidence in the outlook for the housing market, especially in the medium term.
12th Feb 20260 619 3 minutes read Simon Cairnes
The UK residential property market is showing “tentative signs” that it may be turning a corner after a difficult period, with several key indicators improving, says Simon Rubinsohn (pictured), Chief Economist at RICS.
RICS’ January report reveals demand pressures are easing, house prices are stabilising and confidence in the twelve-month outlook is strengthening, despite the current cautious conditions.
The data shows new buyer enquiries improved again in January, with the net balance rising to -15%, up from -21% in December and -29% in November, with downward pressure on demand easing.
Sales improvingAgreed sales are following a very similar pattern, with the latest reading of -9% the least negative since June 2025, with expectations building that activity will strengthen as the year progresses.
On a national level, house prices are stabilising. The three-month net balance for prices improved to -10%, up steadily from -19% in October. According to RICS, though, overall momentum remains weak, but consistent upward movement suggests it may have reached a turning point.
There is, however, a growing disparity between the regions. Price growth is strongest in Scotland and Northern Ireland, and there are reports of upward movement in the North West and North of England. London, the South East, South West and East Anglia, though, continue to trail amidst affordability pressures, although respondents are seeing some modest improvements.
While the strengthening twelve-month outlook is encouraging, near-term expectations remain relatively soft.”
Overall, optimism in the outlook for sales in the next twelve months shot up by +35%, the strongest reading since December 2024, with another +43% anticipating higher prices.
Rubinsohn says: “There are early signs that market conditions may be improving after a challenging period, although activity levels are still subdued, meaning any recovery is likely to be gradual.
“While the strengthening twelve-month outlook is encouraging, near-term expectations remain relatively soft, reflecting ongoing economic uncertainty. Whether this tentative improvement develops into sustained momentum will depend heavily on the trajectory of mortgage rates and broader macro confidence over the coming months.”
Industry reacts
Tom Bill, Head of UK Residential Research, Knight Frank
Tom Bill, Head of UK Residential Research at Knight Frank:
“Plans put on hold by the Budget were activated either side of Christmas, which produced positive demand signals in the early weeks of the year. However, buyers and sellers are once again operating against the unsettling backdrop of a Prime Minister on borrowed time.
“A leadership challenge is likely to derail sentiment in the short term but demand in the longer-term will be shaped by the economic policy platform of any new Prime Minister and whether falling inflation can drag down mortgage rates with it.”
Tomer Aboody, MT Finance
Tomer Aboody, Director of specialist lender MT Finance:
“With an increase in the number of buyers registering with agents, we are hopeful of a market recovery, although this is likely to be gradual.
“With interest rates at more affordable levels than was the case 12 to 24 months ago, buyers are more keen on moving and taking advantage of cheaper borrowing.
“While the London market is lagging behind the rest of the country due to high house prices and the prospect of a mansion tax as proposed by the Chancellor, some recovery is still visible with buyers on the whole willing to swallow the extra tax while some are perhaps hopeful that the next government will abolish it.”
Jeremy Leaf, Principal, Jeremy Leaf & Co
Jeremy Leaf, north London estate agent and a former RICS Residential Chairman:
“Buyer enquiries and sales agreed, particularly for smaller houses and not so much flats, have improved considerably since the beginning of the year.
“This consistently-reliable lead indicator of change confirms what we have seen in our offices after a slower than expected few months – confidence is on the up. However, an increase in listings as well as appraisals, ongoing worries about the economy and slow pace of anticipated mortgage rate cuts, are keeping transaction lengths up and prices in check.”
You can see the full report here.
TagsRICS 12th Feb 20260 619 3 minutes read Simon Cairnes Share Facebook X LinkedIn Share via Email
