Despite the various headwinds, there has been a marked improvement in the housing market, with buyer demand turning positive for the first time since December 2024 and sales activity also showing encouraging signs, says Tarrant Parsons, RICS Head of Market Research & Analysis.

The latest survey of RICS’ estate agent members reveals buyer enquiries have bounced back from a low of -22% to +3% for the first time in six months, while agreed sales have improved dramatically from previous months, rising from -25% to -3%. Near-term expectations for sales volumes have also seen an uplift (-2% to +6%), though agents are predicting a broadly flat landscape over the next 12 months.

Instructions decline

Despite a slight decline in new instructions to sell (+7 to +3), supply levels remain relatively healthy, with market appraisals up compared to the same period last year.

House prices, however, are either flat or marginally negative (-7%), although there is a great deal of variation between the regions. The South East, East Anglia, and London are experiencing more pronounced price declines, while Northern Ireland, the North West, Scotland, and the East Midlands are seeing clear growth.

Almost a quarter of survey participants, though, anticipate price increases in the coming year.

Lettings market

In the lettings market, RICS’ survey shows tenant demand remains largely flat while landlord instructions continue to decline. Despite these challenges, almost a quarter of respondents expect rents to rise in the next three months.

The UK residential market appears to be entering a more settled phase, with demand showing signs of stabilising following a period of volatility.”

Parsons says: “The UK residential market appears to be entering a more settled phase, with demand showing signs of stabilising following a period of volatility. The earlier distortion caused by transactions being brought forward ahead of the Stamp Duty changes now appears to have largely dissipated, allowing underlying trends to re-emerge.

“Encouragingly, near-term sales expectations have begun to edge higher, pointing to a modest shift in sentiment. That said, confidence in the market remains somewhat delicate, with economic uncertainty at both the domestic and global level still seen as a potential headwind. “

Industry reacts

Jeremy Leaf, north London estate agent and a former RICS Residential Chairman, says: “The market feels a bit like one step forward, one-and-a-half steps back. Although doing its best to recover activity levels prevailing earlier in the year, there’s little sign of a significant pick-up yet.

Improved demand

“In our offices, demand has improved, particularly for houses rather than flats, and most sales agreed are staying that way despite some price renegotiation. However, the amount of property available and worries about the economy – regardless of the prospect of further interest rate cuts later in the year – are proving more relevant for many.”

Nervousness about the cost of living again and seemingly inevitable Autumn tax rises are contributing to present tenant affordability concerns.”

And on, lettings he says: “Nervousness about the cost of living again and seemingly inevitable Autumn tax rises are contributing to present tenant affordability concerns. On the ground, we are finding there’s still interest, particularly in smaller one- and two-bedroom flats. Rents are being supported by a continuing lack of stock due to landlords selling up and not being replaced in anything like sufficient numbers by new or existing investors.”

Activity in the market continues to strengthen as buyers return.”

Tomer Aboody, director of specialist lender MT Finance, says: “Activity in the market continues to strengthen as buyers return after the lull following the end of the Stamp Duty holiday. First-time purchaser numbers in particular are picking up as interest rates remain steady and lenders are more flexible when it comes to mortgage approvals.

“However, sales numbers still need to improve as this will benefit the wider economy, not just the housing market. Some encouragement is required via a reform in stamp duty to encourage those moving up the ladder, as well as those downsizing, to take the plunge.”

You can read the full report here.