RICS: UK housing market showing signs of 'tentative recovery'

The housing market is showing tentative signs that it may be turning a corner with sentiment around sales and house prices becoming less negative, according to the Royal Institution of Chartered Surveyors (RICS).

The property market was hampered at the end of 2025 amid uncertainty about tax rises in the Autumn Budget, which led to a dip in house prices towards the end of the year.

Recent house price index data from Halifax and Nationwide shows lower mortgage rates have been taking a while to filter through to wider market activity.

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But the latest figures from the January RICS Residential Market Survey suggest there is more optimism at the coalface.

The RICS report generates net balance scores between -100 and +100 in response to a series of questions put to its members (estate agents and surveyors) about how the housing market has changed.

The data shows several key indicators have continued to improve, recording their least negative readings in months.

New year, new housing market optimism?

RICS members reported that new buyer enquiries improved in January, with the net balance rising to -15%, up from -21% in December and -29% in November.

Agreed sales followed a similar trend, with the latest net balance of -9% – the least negative reading since June 2025.

Hopes for house price growth at a national level appear to be stabilising. The net balance for price growth over the past three months stood at -10%, improving steadily from a low of -19% in October 2025.

House price growth remains strongest in Scotland and Northern Ireland, with upward trends also reported in the North West and North of England, according to the report.

In contrast, London, the South East, South West and East Anglia continue to lag behind the national average reflecting ongoing affordability challenges, RICS said.

Looking ahead, expectations for sales over the next three months eased to a net balance of +4%, but rose to +35% when considering the next 12 months – the strongest reading since December 2024.

Simon Rubinsohn, chief economist for RICS, said: “There are early signs that market conditions may be improving after a challenging period, although activity levels are still subdued, meaning any recovery is likely to be gradual.

“While the strengthening 12-month outlook is encouraging, near-term expectations remain relatively soft, reflecting ongoing economic uncertainty. Whether this tentative improvement develops into sustained momentum will depend heavily on the trajectory of mortgage rates and broader macro confidence over the coming months.”

Will house prices rise in 2026?

There are hopes that lower mortgage rates will boost buyer demand and ultimately push up house prices.

But mortgage pricing has actually been rising in recent weeks and the Bank of England held rates in February amid high inflation, which may well dampen activity in the short term.

This is reflected in responses to the RICS’ survey, with sentiment about house price growth negative over the next three months.

However, +43% of respondents anticipate higher prices over the year ahead which is the most positive outlook since February 2025.

Tom Bill, head of UK residential research at Knight Frank, said: “Plans put on hold by the Budget were activated either side of Christmas, which produced positive demand signals in the early weeks of the year.

“However, buyers and sellers are once again operating against the unsettling backdrop of a prime minister on borrowed time. A leadership challenge is likely to derail sentiment in the short term but demand in the longer-term will be shaped by the economic policy platform of any new prime minister and whether falling inflation can drag down mortgage rates with it.”