UK surveyors see a weaker year for home sales and firmer rents as mortgage costs climb

Property surveyors in England and Wales turned the most pessimistic about home sales over the coming year since July 2023, with a net balance of -17% expecting sales to fall, according to the Royal Institution of Chartered Surveyors' October survey. The same survey showed expectations for rents at their strongest since early 2024.

Buyers stayed away and fewer homes came to market

RICS said the renewed rise in mortgage interest rates over recent months was weighing on buyer demand. Its new buyer enquiries indicator returned a net balance of -24% in October, unchanged from September, and virtually all parts of the UK reported falling or stagnant enquiries.

Agreed sales fell to a net balance of -24% from -18%, the weakest reading of the past three months, though still less negative than the -33% average of the second quarter, the survey said. A net balance is the share of surveyors reporting a rise minus the share reporting a fall, so it measures how widespread a change is, not its size.

Supply also thinned. The new instructions to sell balance slipped to -8% from +6%, and market appraisals, the valuations agents carry out before a home is listed, returned -34%. RICS said those readings suggest the pipeline of new listings may slow further over the next few months.

Prices weakest in London and the South East

The house price balance, which tracks the past three months, edged down to -36% from -34%, turning more negative for a second month after appearing to stabilize through the summer, RICS said. London, East Anglia, the West Midlands and the South East showed weaker price momentum than the national average, while prices kept rising firmly in Northern Ireland, with modest growth in Scotland and the North West of England.

Surveyors now expect prices to ease over the next 12 months. The year-ahead price expectations balance fell to -17% from zero, which RICS said equates to a decline of around 1% in point-estimate terms. Twelve-month sales expectations, at -17%, were hurt by "recent geopolitical and energy market developments," the report said, and three-month sales expectations stood at -11%.

The survey covered 443 branches from 235 responses, and its national headline readings cover England and Wales.

Tenants returned while landlords kept leaving

The rental market moved the other way. Tenant demand rose to a net balance of +7% from -1%, based on the quarterly seasonally adjusted lettings data, while new landlord instructions stayed at -30%. With supply constrained, the balance of surveyors expecting rents to rise over the next three months reached +41%, up from +29%, its strongest reading since early 2024.

The survey followed the Bank of England's decision to raise Bank Rate to 4%, as FinanceInTime reported. The central bank's next decision is due on December 17, and RICS said its November survey is due on December 10. Housebuilder Taylor Wimpey cited higher mortgage rates when it lowered its 2026 build target in a trading statement.

Higher rates are moving pressure from buyers to renters

We think the more important signal is the split between the two markets rather than the modest price balance. Buyers are holding back while landlords keep withdrawing homes, so the same rate rise that cools purchases is pushing more households into a rental market that is short of supply, and the +41% rent expectations balance shows surveyors see that cost arriving soon.

The opportunity is for buyers outside London and the South East: if Bank Rate stays at 4%, we expect sales to stay subdued over the next six months, giving buyers more room to negotiate on prices that surveyors expect to drift about 1% lower. The threat is a further rise on December 17, which would hit affordability again just before the spring market and add to rent pressure. A recovery in new buyer enquiries toward zero, or a rise in landlord instructions, would change our view. These are surveyor sentiment readings, not price data, and regional differences are wide.

The view in this final section is FinanceInTime's editorial opinion, for information only. It is not investment, tax, legal or other advice, and it does not take your circumstances into account. Forecasts are uncertain and past results do not guarantee future ones.