Key facts
- Buyer demand in the UK housing market weakened in September due to rising interest rate expectations.
- New buyer inquiries fell to -22% in September, the first monthly decline since March.
- Agreed sales continued to fall, with the net balance at -18%.
- House prices faced downward pressure, with the net balance for price changes falling to -32%.
- Tenant demand in the lettings market increased, while landlord supply remained constrained.
- RICS expects rents to rise over the next three months, with a net balance of +37%.
The UK housing market experienced a loss of momentum in September, primarily driven by concerns over rising interest rates, according to the latest Royal Institution of Chartered Surveyors (RICS) UK Residential Market Survey. Buyer confidence waned, leading to a decrease in new inquiries and a continued fall in agreed sales.
The net balance for new buyer inquiries dropped to -22% in September, down from -18% in August, marking the first monthly weakening of this indicator since March. Despite this dip, the figure remains stronger than the recent low of -41% recorded six months prior. Similarly, the agreed sales net balance declined to -18% from -16%, though it was still less negative than the three-month average of -25%. Expectations for sales over the next three months also softened, with the net balance falling to -6% from -3%.
House prices continued to face downward pressure, with the headline house price net balance decreasing to -32% in September, down from -28% in August. This ended a four-month period where the indicator had shown progressive improvement. Regional variations were significant, with most parts of England reporting more negative price balances, and London showing a weaker trend than the national average. Northern Ireland, however, continued to see price rises, and Scotland recorded modest growth.
Looking ahead, respondents anticipate further near-term price pressure, with a net balance of -24% for three-month house price expectations. However, over a 12-month horizon, the balance was zero, suggesting an expectation of a broadly flat price trend. In contrast, the lettings market showed increased tenant demand (+23%) while landlord supply remained constrained, leading to expectations of continued rental growth (+37% for the next three months).