A bleak report from RICS reveals agents are reporting that the housing market has weakened as buyer demand softens and house prices fall.

Tarrant Parsons (pictured), Head of Market Research and Analysis at RICS, says housing market activity, buyer demand, sales, and new listings all now coming under pressure.

The RICS UK Residential Survey August 2025 reveals new buyer enquiries have fallen for the second consecutive month, with a net balance of -17%, compared with -7% in July.

Sales down sharply

Agreed sales slipped even more sharply, with a net balance of -24% (down from -17% last month). And respondents expect sales to remain largely stagnant over the coming quarter.

RICS’ overall house price gauge dropped to -19% as they continue their downward trend. Some of the larger declines were reported in East Anglia (-64%) and the South West (-46%), although Northern Ireland continues to buck the trend with rising prices.

And new vendor instructions recorded a slight decline (-3%), the first negative reading since June 2024, suggesting fewer fresh listings.

Concerns over the wider economic and fiscal outlook, combined with questions around the future path of interest rates amid stubbornly high inflation, are weighing on sentiment at this time.“

In the rental sector,  landlord instructions saw the steepest fall since April 2020 (-37%), while tenant demand remains resilient. As a result, respondents are expecting rents to rise by around 3% over the next year.

And the survey’s participants are cautious about the sector’s outlook, too. Near-term expectations are for a continued softening of prices (-20% over the next three months), with sales forecasted to remain flat. On a twelve-month basis, they are anticipating modest but lower price growth than was expected earlier in the year.

Parsons says: “With buyer demand easing and agreed sales in decline, the housing market is clearly feeling the effects of ongoing uncertainty. Concerns over the wider economic and fiscal outlook, combined with questions around the future path of interest rates amid stubbornly high inflation, are weighing on sentiment at this time.“

Industry reaction

Jeremy Leaf, north London estate agent and a former RICS chairman, says: “Demand is weakening, but we have continued to agree sales of houses in particular over the past few weeks during and since the summer holidays. However, quality is trumping quantity in terms of viewing numbers in our offices at the moment.

“On the other hand, flats are proving more challenging to sell, mainly due to the amount of choice. Overall, listings are increasing faster than enquiries, making transactions even more protracted and resulting in softening prices.

“Around 25 per cent of our buyers and sellers too seem to have paused since rumours of additional property taxes being introduced in the Budget began circulating.”

Tomer Aboody, director of specialist lender MT Finance, says: “The threat of further taxes on the way is having a big effect both on the sales and rental sectors.

“With a limited amount of buyers, sellers are needing to reduce pricing in order to attract those willing to commit, whereas the opposite is happening in the rental market, as rents increase due to fewer buy-to-let landlords as they exit the sector.

“Let’s hope the Chancellor sees that the market needs help and tries to revive it, benefiting the wider economy at the same time.”