Higher mortgage rates and ongoing geopolitical uncertainty continue to weigh heavily on the UK housing market with buyer demand and agreed sales remaining firmly negative during April, according to the latest UK Residential Market Survey from the Royal Institution of Chartered Surveyors (RICS).
The survey points to a subdued market across much of the country, with affordability pressures and concerns over future borrowing costs continuing to dampen confidence, particularly in London and southern England.
New buyer enquiries recorded a net balance of -34% in April, although this was a modest improvement on March’s -40% reading. Agreed sales remained weak at -36%, broadly unchanged month-on-month.
Forward-looking indicators also suggest little immediate recovery, with sales expectations over the next three months sitting at -32%, while twelve-month expectations slipped into negative territory at -6%.
HOUSE PRICE PRESSURE
House prices faced increased downward pressure during April, with the headline price indicator falling to -34%, compared with -25% the previous month.
RICS says the regional divide across the housing market continues to widen, with London, the South East, East Anglia and the South West seeing the sharpest downward pressure on prices, while northern England, Scotland and Northern Ireland continued to prove more resilient.
The North West and North of England both continued to record marginally positive price growth, while prices were still rising in Scotland and Northern Ireland.
Supply conditions remained broadly flat, although surveyors reported signs that future listings could weaken. New instructions registered a net balance of -3%, while the new appraisals measure fell sharply from zero to -16%.
The rental market, however, continued to show strong imbalance between supply and demand. Tenant demand increased with a net balance of +14%, while landlord instructions remained negative at -17%. A net balance of +25% of respondents expect rents to rise further in the coming months.
MACRO HEADWINDS
Tarrant Parsons (main picture, inset), Head of Market Research & Analysis at RICS, says: “April’s results show a housing market still in the grip of macro headwinds stemming from the Middle East conflict.
“Recent warnings from the Bank of England that interest rate rises may be required to tackle renewed inflation, driven by elevated oil prices and disrupted supply chains, underline the challenging environment facing buyers.
“Until there is a clearer path for inflation and borrowing costs, activity and sentiment look set to remain subdued, particularly across southern England and London where affordability pressures are most acute.”
MARKET CONFIDENCE
Survey respondents also pointed directly to the impact of higher mortgage rates and global instability on market confidence.
Roshan Sivapalan MRICS of Blakes Surveyors in London, says: “Ongoing Middle East uncertainty and recent mortgage rate increases are suppressing sales activity.
“However, demand persists for realistically priced stock, and the market continues to function where pricing aligns with buyer expectations.”
Despite the wider slowdown, some northern regions continue to show signs of resilience.
Neil Foster MRICS of Hadrian Property Partners in Northumberland adds: “The sales market shuddered at the start of conflict in the Middle East, and the continued (relatively) high cost of borrowing has suppressed the investment market.
“However, sales activity appears to be reviving, and we expect May to yield an increase in activity.”
The latest RICS figures add to growing evidence that elevated borrowing costs are continuing to reshape housing market activity in 2026, with buyers becoming increasingly price-sensitive and sellers under pressure to align expectations with current market conditions.
INDUSTRY REACTION
Tom Bill, Head of UK Residential Research at Knight Frank, said: “After mortgage costs were pushed higher by the Middle East conflict and associated energy price shock, the prospect of a new government to the left of Keir Starmer brings its own inflationary concerns and has squeezed buyers further.
“Those sitting on mortgage offers that predate the conflict are keen to transact, but downwards pressure on prices will increase as offers lapse in coming months.
“We expect minimal UK house price growth of 1.5% this year, but that depends on how events in the Middle East and at Westminster play out.
“The Renters’ Rights Act has reinforced the imbalance between supply and demand in the rental market, which will sustain upwards pressure on rents.
“This is an unintended consequence of the new rules and upwards pressure on rents could intensify by curbing supply further if future green regulations for landlords are introduced without effective consultation.”
CAUTIOUS MODE
Jeremy Leaf, north London estate agent and a former RICS Residential Chairman, says: “Market activity was previously supported not only by wage growth outpacing house prices but by mortgage offers obtained at more advantageous rates before the war in Iran began.
“However, now those elements are beginning to unravel as hostilities persist, concerns about near-term interest rates and inflation are proving more relevant.
“The result is buyers and sellers are reverting to cautious mode. The amount of stock available – particularly of flats – means buyers find themselves in a strong position.
“Fortunately, relatively few previously-agreed sales are falling through though we are seeing more re-negotiations and price reductions as the need-to-move sellers try to achieve their aims.”
COST OF LIVING
And he adds: “The Renters’ Rights Act has prompted some landlords to sell though not as many as we had feared. The resultant shortage is supporting rents which would have probably otherwise dipped bearing in mind continuing tenant affordability concerns.
“Demand has improved a little in the past month or so but the rising cost of living partly due to the war in Iran is frequently mentioned in our offices as a reason not to increase rental offers too far.”
