UK buyer demand weakened for the first time since March in September as expectations of higher interest rates put renewed pressure on the housing market.
The latest RICS UK Residential Market Survey shows the new buyer enquiries net balance fell to -22%, from -18% in August.
Although still substantially better than the -41% recorded six months ago, September marked the first deterioration in the measure for six months.
Agreed sales also remained under pressure, with the net balance slipping from -16% to -18%, while expectations for sales over the next three months weakened from -3% to -6%.
HOUSE PRICES
Price indicators also deteriorated following four consecutive months of improvement.
The headline house price balance fell to -32% from -28% in August, with most English regions recording negative readings and London notably weaker than the national figure.
Northern Ireland continued to record rising prices, while Scotland reported more modest growth.
Respondents remain cautious about the immediate outlook, with the three-month price expectations balance at -24%. However, the 12-month measure stood at zero, pointing towards broadly flat prices over the longer period.
There were tentative signs of more homes coming onto the market, with new sales instructions recording a +6% balance – the first positive reading since the middle of 2025.
RENTAL DEMAND
Conditions in the lettings market remain markedly different.
Tenant demand recorded a +23% balance, representing a third consecutive monthly acceleration, while landlord instructions remained in negative territory.
A net balance of +37% of respondents expects rents to increase during the next three months. That was down from +44% in August but remained above the +27% average recorded during the first half of the year.
Tarrant Parsons, Head of Market Research and Analysis at RICS, says: “A renewed rise in interest rate expectations has created a fresh headwind for the housing market, with buyers becoming a little more cautious and sales activity losing some momentum this month.
“Even so, the latest results do not point to any significant shift in direction. Rather, they suggest the market may need to contend with a somewhat longer period of subdued activity as households adjust to the prospect of borrowing costs remaining higher than previously anticipated.”
PAIN BARRIER
Tom Bill, Head of UK Residential Research at Knight Frank, says: “There is pain in the post for the UK housing market as the impact of higher mortgage costs filters through the system.
“Mortgage offers can last for six months, which means deals that pre-date the Middle East conflict have now disappeared.
“Higher borrowing costs will increase downward pressure on prices and transaction volumes in the final months of the year.
“The situation could be exacerbated as buyers and sellers speculate about which of the recurring tax rumours ahead of the Budget proves to be true.”
