Housing market activity was dampened by the Autumn Budget in November and a recovery isn’t likely until the spring, research by the Royal Institution of Chartered Surveyors (RICS) warns.
The latest RICS UK Residential Market Survey for 2025 revealed the weakest reading for buyer demand since late 2023, while agreed sales and new instructions are also negative.
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.
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The professional body said three quarters of the sample of responses were gathered after the Autumn Budget, providing the most recent update of market sentiment following the fiscal update.
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Simon Rubinsohn, chief economist at RICS, said: “The housing market has been struggling for momentum for several months, and the recent Budget announcements are unlikely to materially shift that picture.
“The ending of Budget-related uncertainty is welcome, but the fundamental challenges of affordability and elevated borrowing costs will in all probability keep activity subdued in the near term.”
The post-Budget housing market
The chancellor didn’t have much good news for the housing market in her Autumn Budget last month.
Rather than the hoped-for stamp duty reforms, prime property owners are set to be hit with mansion tax charges on homes worth more than £2 million, while tax on property income has been increased.
The market had already paused in the build-up to the Budget and the RICS research suggests there is little hope of significant growth in the short term.
New buyer enquiries in November recorded a net balance of -32%, down from -24% in October, marking the weakest reading since late 2023, the RICS report revealed.
Agreed sales remained down, with a net balance of -23%.
Meanwhile, sales expectations weakened, with a net balance of -6%, compared with -3% in October.
The headline net balance for new instructions was -19%, similar to the previous reading of -20%, indicating a continued slowdown in the flow of properties being listed for sale.
A net balance of -40% of respondents also reported that the number of market appraisals being undertaken is running below levels seen 12 months ago. This suggests the pipeline for new instructions is likely to remain subdued in the near term, RICS said.
In some good news, a net balance of +15% of respondents anticipate sales volumes will pick up, a more positive result than the +7% recorded last month.
Will house prices rise in 2026?
The housing market in 2025 was driven by the rush to beat changes in stamp duty thresholds in the first three months of the year, then worries about property tax changes in the build up to the Autumn Budget since September.
That provided limited windows of opportunity for activity and the Autumn Budget failed to provide any policy boosts for the property market.
This is feeding into house price expectations.
A net balance of -15% don’t expect prices to rise in the near term, according to the RICS survey, but +24% are expecting values to rise over the next 12 months.
There are regional differences though.
The net balance in London dropped to -44%, now more negative than any other part of the UK, partly attributed to plans for a mansion tax.
In contrast, respondents in both Northern Ireland and Scotland continue to cite an upward trend in house prices.
Analysts are hopeful that the prospects of interest rate cuts and lower borrowing costs in 2026 could boost demand and push up house prices.
Rubinsohn added: “The 12-month outlook has brightened somewhat, likely reflecting a growing sense that the Bank of England may have a little more scope to reduce interest rates than seemed plausible only a short while ago.”
The positive outlook is reflected in recent market forecasts.
Estate agency brand Hamptons predicts that average house prices will rise by 2.5% next year, with stronger growth in the Midlands and North where affordability is less stretched.
Savills is predicting a 2% rise next year.
Tom Bill, head of UK residential research at Knight Frank, which has previously predicted that growth will be flat in 2026, said: “The barrage of property tax speculation before the Budget unsurprisingly soured sentiment among buyers and sellers.
“Now there is clarity, we expect existing transactions to accelerate before Christmas, and activity should remain relatively strong in early 2026.
"A downwards trajectory for interest rates will support demand but political uncertainty will become the key risk. The game of ‘guess the tax rise’ played in recent months could become a game of ‘guess the chancellor’ if next spring’s local elections are as bad for Labour as the polls suggest.”
