The October RICS Residential Survey results continue to point to subdued market conditions, with rising mortgage interest rates over recent months weighing on buyer demand.
Moreover, twelve month expectations for sales volumes were revised down in the latest results, suggesting respondents expect the current constraints on market activity to persist for some time yet.
The new buyer enquiries indicator returned a net balance of -24% in October, unchanged from the previous reading and therefore still consistent with negative momentum for buyer demand. At the regional level, virtually all parts of the UK reported either falling or stagnant buyer enquiries over the latest month.
Turning to agreed sales, the headline net balance fell to -24% in October, down from -18% previously and marking the weakest reading over the past three months. That said, the latest figure remains less negative than the average net balance of -33% recorded during the second quarter of the year.
Looking ahead, both the three and twelve-month sales expectations indicators deteriorated, returning net balances of -11% and -17% respectively. For the twelve-month outlook, this represents the most pessimistic reading since July 2023, with sentiment adversely affected by recent geopolitical and energy market developments.
Looking at the supply picture, the new instructions to sell net balance turned marginally negative, signalling a slight reduction in the flow of properties coming onto the sales market.
Meanwhile, the market appraisals series remains firmly in negative territory, returning a net balance of -34%, the softest reading since November 2025.
Taken together, these results suggest the pipeline of new listings may slow further over the next few months.
Having appeared to be stabilising somewhat through the summer period, the house price indicator has now turned more negative in each of the past two months, signalling that modest downward pressure on prices is not dissipating for the time being.
At the regional level, London, East Anglia, the West Midlands and the South East of England all exhibit weaker momentum behind house prices than the national average. On the flipside, prices continue to rise firmly across Northern Ireland, while modest growth remains evident in Scotland and the North West of England.
At the headline level, respondents now envisage a modest easing in house prices over the next twelve months. The year-ahead house price expectations series registered a net balance of -17% in October, down from a flat reading previously.
However, in point estimate terms, this equates to a relatively modest decline of around 1%. At the regional level, it is again those parts of the country where price falls are slightly more pronounced than the UK-wide average that are expected to see some further softening through 2027.
Tom Bill, head of UK residential research at Knight Frank, commented: “The latest slump in confidence shows how decisions in Washington not Westminster are shaping the outlook for the UK housing market. Rising mortgage rates have put downward pressure on sales volumes and prices this year due to the energy price shock caused by the Middle East conflict. There is growing pressure on Donald Trump to find a diplomatic solution following the mid-term elections, which means borrowing costs have started edging lower over the last week, a trend that would only accelerate if a lasting ceasefire was agreed.”
Tomer Aboody, founding director of MT Finance, said: “With mortgage rates increasing, along with base rate, and expectations of further rises on the horizon, buyers are understandably nervous and cautious about making a move.
“With another one or two rate rises expected, we anticipate a slowdown in activity in the market. However, buyers who are able to afford the higher mortgage payments could find themselves in a strong position to negotiate with sellers due to the slowdown in registered buyer enquiries.”
