RICS: The UK housing market appears to be "tentatively recovering"

Members of the RICS are growing less pessimistic about real estate sales and home values

How does the real estate market respond to the most recent data?

According to the Royal Institute of Chartered Surveyors (RICS), the feeling surrounding sales and home prices is becoming less pessimistic, which is a tentative indication that the housing market may be turning around.

House prices declined toward the end of 2025 as a result of the property market being hindered by uncertainty surrounding tax increases in the Autumn Budget.

Lower mortgage rates have been slow to trickle down to broader market activity, according to recent Halifax and Nationwide house price index data.

There appears to be more hope at the coalface, however, according to the most recent data from the January RICS Residential Market Survey.

The RICS report asks its members (estate agents and surveyors) a series of questions about how the housing market has changed, and it produces net balance scores ranging from -100 to +100.

Numerous important indicators have continued to improve, according to the data, showing their lowest negative readings in months.

New year, new hope for the housing market?

RICS members stated that January saw an improvement in new buyer inquiries, with the net balance increasing to -15 percent from -21 percent in December and -29 percent in November.

The trend for agreed sales was similar, and the most recent net balance of -9 percent was the lowest since June 2025.

National expectations for the growth of home prices seem to be leveling off. After falling to a low of -19 percent in October 2025, the net balance for price growth over the last three months was -10 percent, steadily improving.

Scotland and Northern Ireland continue to have the fastest rates of house price growth, while the North West and North of England also show encouraging trends, the report says.

However, according to RICS, London, the South East, the South West, and East Anglia are still below the national average, which is indicative of persistent affordability issues.

Future sales projections decreased to a net balance of +4 percent over the next three months, but increased to +35 percent over the next 12 months, which is the highest reading since December 2024.

RICS chief economist Simon Rubinsohn stated: "Early indications suggest that market conditions might be getting better following a difficult time, but activity levels are still low, so any recovery is probably going to be gradual.

"Even though the 12-month outlook is improving, short-term expectations are still low, which is indicative of the continuous economic uncertainty. In the upcoming months, the trajectory of mortgage rates and overall macro confidence will have a significant impact on whether this tentative improvement turns into sustained momentum.

Will 2026 see an increase in home prices?

Lower mortgage rates are expected to increase buyer demand and, eventually, raise home values.

However, the cost of mortgages has been going up lately, and the Bank of England raised rates in February due to high inflation, which could temporarily slow down activity.

The RICS survey results show that people are not optimistic about the growth of home prices over the next three months.

However, the most optimistic outlook since February 2025 is that +43 percent of respondents expect prices to rise over the next year.

"Plans put on hold by the Budget were activated either side of Christmas, which produced positive demand signals in the early weeks of the year," stated Tom Bill, head of Knight Frank's UK residential research.

However, the unsettling backdrop of a prime minister on borrowed time is once again affecting buyers and sellers. In the short run, a leadership challenge is likely to derail sentiment, but in the long run, demand will be influenced by the new prime minister's economic policy platform and whether or not declining inflation can also drive down mortgage rates.