Sentiment appears to be improving in the property market but the mood isn’t translating into actual sales yet, research suggests.
The latest Residential Market Survey for December from the Royal Institution of Chartered Surveyors (RICS) shows expectations for home sales and house prices have turned more positive following months of uncertainty.
It comes as the housing market stalled in the final months of the year amid uncertainty about tax rises in the Autumn Budget.
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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 November report suggested confidence remained low in the aftermath of the fiscal update.
But since then, homebuyer budgets have been boosted by interest rate cuts and falling mortgage rates.
The RICS report suggests that while surveyors are negative about the current market, there are hopes of change in the coming months.
In particular, sales expectations over the next three months rose to the highest level in more than a year.
But current buyer demand and agreed sales remain negative, according to the report.
Hope for the housing market
House price growth slowed last year as the market adapted to higher stamp duty costs and navigated Autumn Budget uncertainty.
There are hopes that now that the Budget is out the way and interest rates may be cut further, the housing market may finally catch a break.
Supply conditions have stabilised, according to the RICS report.
This hasn’t translated into home purchases yet though.
Buyer demand and agreed sales remained in negative territory in December.
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, RICS said.
Meanwhile, new vendor instructions flattened to a net balance of 0%, ending several months of decline.
The report cautioned that while this suggests the market has stopped deteriorating, low appraisal activity indicates that any meaningful increase in stock will take time to materialise.
In some good news, sales expectations over the next three months rose to +22% – the strongest reading since October 2024.
Prospects for the property market also improve with a longer term view.
Looking 12 months ahead, a net balance of +34% of respondents expecting sales volumes to rise – more than double the level seen in November.
Surveyors highlighted easing interest rate expectations and the clearing of Budget-related uncertainty as key drivers behind the turnaround in mood.
Tarrant Parsons, RICS head of market research and analysis, 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 12-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.”
Will house prices rise in 2026?
The days of double digital house price gains appear to be over.
House price growth slowed towards the end of 2025.
Forecasts vary, with property website Zoopla predicting that house price growth will be slow in 2026 at 1.5%, while Halifax has forecast up to 3%.
Research by Hamptons also shows that in 2025, 14.8% of Londoners sold their home for less than they bought it for, the highest proportion in England and Wales and above the national average of 8.7%.
Respondents to the RICS report suggest house prices continue to edge down nationally, with a net balance of -14%, but the trend is clearly moderating.
There are regionally differences, with prices falling more sharply in London and the South East, while Scotland and Northern Ireland continue to record growth.
Looking ahead, short-term price expectations have improved to near-flat levels, while +35% of respondents now expect prices to rise over the next year – the most upbeat outlook since late 2024.
Commenting on the report, Tom Bill, head of UK residential research at Knight Frank, said: “The renewed confidence seen in recent weeks underlines the rule that the less a government intervenes in the housing market, the closer it operates to full capacity.
“The combination of clarity around taxation and the prospect of further rate cuts means demand in the first weeks of January has been stronger than normal.
"That doesn’t mean the market is now on an upwards trajectory and domestic political risks could still undermine sentiment over the next six months. For now, the absence of bad news means that some of the demand that became pent up last year is being released and we expect UK prices to grow by 3% this year.”
