The UK housing market remained soft at the end of 2025, but confidence is returning as expectations for sales and prices turn more positive, according to the latest RICS survey.
The data 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.
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.
Tarrant Parsons, head of market research & 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 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.”
Tomer Aboody, director of MT Finance, commented: “Whether it’s the new year boost or the reduction in base rate at the end of last year, there is a buoyant mood in the housing market with good activity from buyers and sellers alike, with more stock soon to come to the market.
“As we continue to digest the Budget, many are coming to terms with the current situation and choosing to make their move. With the prospect of further rate reductions, we are hoping to see increased activity in the form of more transactions as the year pans out.”
Emma Cox, MD of real estate at Shawbrook, added: “Whilst December figures were subdued, forward-looking sentiment was strong, indicating that the property market could bounce back in early 2026. The latest survey showed that sales expectations over the next three months rose to +22%, marking the strongest reading since October 2024. This, paired with interest rates dropping to 3.75% in mid December, may prompt renewed activity in the property market."
Jeremy Leaf, north London estate agent and former RICS residential chairman, said: “Falls in interest rates and inflation may have arrived too late last month to have much impact on activity. However, market activity has certainly perked up in our offices since confirmed in this historically-reliable lead indicator report. A two-tier market is developing with more interest in smaller two and three-bedroom houses where prices are hardening rather than larger, more expensive homes likely to be affected by the new Mansion Tax. Conversely, an over-supply and worries about outgoings for flats is reducing demand so values of many are also softening. Continuing uncertainties, particularly about the economy and closer-to-home unemployment prospects, are still influencing decision-making too.”
