Housing market may be turning a corner as confidence grows – surveyors

The UK housing market may be “turning a corner”, with signs that confidence is returning and that expectations for sales and prices are becoming more positive, according to surveyors.

Sales expectations among property professionals for the next three months picked up to the strongest level recorded since October 2024, according to the December survey from the Royal Institution of Chartered Surveyors (Rics).

A net balance of 22% of professionals expect sales to increase rather than decrease in the next three months.

Looking 12 months ahead, there were signs of stronger optimism, with a net balance of 34% of professionals expecting the number of sales to increase.

Surveyors pointed to easing interest rate expectations and the clearing of budget-related uncertainty as key drivers behind the turnaround in mood.

While house prices in the next three months are expected to remain broadly flat, momentum is expected to pick up looking further ahead, with a balance of 35% of professionals expecting prices to increase over the next year, marking the most upbeat outlook since late 2024.

Rics said the housing market remained “soft” at the end of 2025, with a net balance of 24% of professionals reporting a fall in new buyer inquiries and a balance of 19% of professionals seeing a fall in sales.

Both measures improved slightly on the previous month, indicating that the downturn is losing momentum, it said.

House prices continued to edge down generally in December, with a net balance of 14% of professionals reporting falls, although the downward trend is moderating, the report said.

House prices in December were falling particularly sharply in London and the South East, while Scotland and Northern Ireland continue to record house price growth.

Rics said the lettings market remains under pressure, with persistent supply constraints.

Rents are expected to keep rising, with average rental growth forecast at around 3% over the next 12 months, the report said.

Tarrant Parsons, head of market research and analysis at Rics, said: “The UK residential market remains in a prolonged soft patch, with December’s survey recording a sixth consecutive month of negative momentum in buyer inquiries.

“That said, there are tentative signs of a shift in sentiment beneath the surface.

“Near-term sales expectations have strengthened, and the 12-month outlook has edged into more positive territory.

“The key test for 2026 will be whether borrowing costs ease on a sustained basis.

“If so, this could provide the catalyst needed to drive a recovery in buyer demand.”

Tom Bill, head of UK residential research at Knight Frank, said: “The combination of clarity around taxation and the prospect of further rate cuts means demand in the first weeks of January has been stronger than normal.

“That doesn’t mean the market is now on an upwards trajectory and domestic political risks could still undermine sentiment over the next six months.

“For now, the absence of bad news means that some of the demand that became pent up last year is being released and we expect UK prices to grow by 3% this year.”

He added: “Tenant demand has been relatively strong in the lettings market following the budget and the clarity it brought.

“However, supply is still under pressure as more landlords sell up due to the proliferation of red tape and taxes in recent years.”

Sarah Coles, head of personal finance at Hargreaves Lansdown, said of the Rics report: “This is a major change in sentiment, but it remains to be seen whether it will be shared by buyers and sellers in the coming months.

“There is always hope that the fresh enthusiasm of a new year will draw people back to the market – ready for a new start.

“The fact that mortgage rates have fallen and house prices are rising more slowly than wages should help more buyers wrestling with affordability challenges.”

She added: “There is the hope that with rents expected to rise 3%, wages might grow faster, protecting renters.

“However, given how wage rises have slowed and the number of jobs in the economy has been dropping, there are no guarantees.”

David Fell, lead analyst at Hamptons, said: “The North-South divide looks likely to persist into 2026. Housing markets across the Midlands and North seem set to keep the lion’s share of house price growth this year.

“Meanwhile, early signs suggest that sellers in southern markets are still having a tougher time. Many have seen price growth grind to a halt, or even in some cases, slip backwards.

“Southern markets will bear the brunt of the impending mansion tax, and 2026 will see prices here adjust to reflect this new reality.

“While 2026 will see some borrowers coming to the end of shorter, more expensive fixed-rate deals and securing cheaper offers, some are still adjusting to more expensive repayments.”