The UK housing market remained soft at the end of 2025, but confidence is returning as expectations for sales and prices turn decisively more positive, according to the latest RICS UK Residential Market Survey.
The Royal Institution of Chartered Surveyors (RICS) found that buyer demand and agreed sales remained in negative territory in December, reflecting a market that has been subdued for much of 2025.
New buyer enquiries registered a net balance of -24%, while agreed sales came in at -19%. However, both measures improved slightly on the previous month, signalling that the downturn is losing momentum.
The standout indicator was a shift in forward-looking sentiment. Sales expectations over the next three months rose to +22%, the strongest reading since October 2024. Looking twelve months ahead, optimism strengthened further, with a net balance of +34% of respondents expecting sales volumes to rise – more than double the level seen in November. Surveyors point to easing interest rate expectations and the clearing of Budget-related uncertainty as key drivers behind the turnaround in mood.
Supply conditions also stabilised. New vendor instructions flattened to a net balance of 0%, ending several months of decline. While this suggests the market has stopped deteriorating, low appraisal activity indicates that any meaningful increase in stock will take time to materialise.
House prices continue to edge down nationally, with a net balance of -14%, but the trend is clearly moderating. Regional divergence remains stark: prices are falling more sharply in London (-42%) and the South East (-32%), while Scotland and Northern Ireland continue to record growth. Looking ahead, short-term price expectations have improved to near-flat levels, and +35% of respondents now expect prices to rise over the next year – the most upbeat outlook since late 2024.
The lettings market remains under pressure. Tenant demand weakened further in December (-27%), while new landlord instructions stayed deeply negative (-39%), underlining persistent supply constraints. Rents are expected to keep rising, with average rental growth forecast at around 3% over the next twelve months.
While activity on the ground remains subdued, the December survey suggests the market may be turning a corner. With interest rates expected to fall further and confidence rebuilding, the foundations are being laid for a more active start to 2026.
RICS Head of Market Research & Analysis, Tarrant Parsons, 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 enquiries. That said, there are tentative signs of a shift in sentiment beneath the surface.
“Near-term sales expectations have strengthened, and the twelve-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.”
