The UK housing market remained subdued in May although the pace of decline appears to be stabilising after several months of deterioration, according to the latest Royal Institution of Chartered Surveyors (RICS) Residential Market Survey.
Buyer demand and agreed sales both remained firmly in negative territory during the month, but key indicators showed no further weakening, suggesting market conditions may be finding a floor.
New buyer enquiries recorded a net balance of -34% in May, unchanged from April and the first time since January that demand has not deteriorated further. Agreed sales also held steady at a net balance of -37%, indicating that while activity remains weak, the rate of decline is no longer accelerating.
Despite signs of stabilisation, the market continues to face significant challenges. The average time taken to move from listing a property to completion increased to 21.5 weeks, the longest recorded since RICS began tracking the measure in 2017.
DOWNWARD PRESSURE
House prices also remained under pressure, with the headline price balance holding at -35% for a second consecutive month. Survey respondents reported the greatest downward pressure across the South East and East Anglia, while Northern Ireland continued to outperform with stronger price growth.
Short-term sentiment remains cautious. Sales expectations for the next three months improved slightly to -25%, up from -32% and -34% in the previous two surveys. Looking further ahead, respondents were more optimistic, with 12-month sales expectations moving into positive territory at +2%.
Price expectations painted a similar picture. A net balance of -45% of surveyors expect prices to fall over the next three months, but expectations for the year ahead edged into positive territory at +6%.
The rental sector continues to face growing pressure as demand outstrips supply. Tenant demand increased during May, with a net balance of +14% reporting rising demand, while landlord instructions remained deeply negative at -28%.
As a result, rental growth expectations strengthened, with a net balance of +36% anticipating higher rents, the strongest reading since May 2025.
GROWING DIVIDE
Tarrant Parsons (main picture, inset), Head of Market Research and Analysis at RICS, says: “The latest survey data suggest the recent downturn in activity may be beginning to stabilise, with several key indicators broadly holding steady.
“However, as they remain in negative territory, it would be premature to interpret this as the start of a recovery.”
Industry respondents pointed to a growing divide between realistically priced properties and vendors still holding out for peak market values.
MARKET STANDOFF
Stan Shaw, RICS Registered Valuer, Ham, Between Richmond and Kingston, Surrey, Mervyn Smith, says: “An obvious standoff in the market where too many vendors are still hanging out for a price which is no longer achievable and available stock is growing.
“Conversely when new properties come on at an appropriate figure there are available willing buyers.”
And Tony Dobbins MRICS, Darlington, Anthony Jones Properties, adds: “May showed resilience beneath a softening headline. Buyer demand remains genuine across mainstream price points, with serious purchasers continuing to transact.
“Above £400,000 the market is more selective, and accurate pricing at instruction is proving the single biggest determinant of outcome.
MIDDLE EAST IMPACT
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “Downward pressure remains on the price of flats in particular due principally to worries about the longer-term impact of war in the Middle East on the cost of living.
“On the other hand, viewings are steady and the overwhelming majority of agreed sales are staying that way although they are lengthening as it becomes increasingly tricky to inject urgency while choice in most price ranges is plentiful.
“In our offices, present and future concerns about affordability are certainly keeping letting activity under control.
“Rents would probably have otherwise softened further if it wasn’t for the shortage of stock prompted by the investment property sell-off in the period leading up to the introduction of the Renters’ Rights Act.
“Demand remains relatively strong, partly reinforced by higher mortgage costs which are persuading tenants to continue renting rather than try to purchase.”
FALLING FLAT
Tom Bill, Head of UK Residential Research at Knight Frank, says: “The spring bounce in the UK housing market has fallen flat this year.
“At a time when prices and activity would normally be rising, the tougher mortgage landscape is keeping demand in check.
“We expect the Bank of England to sit on its hands for the foreseeable future due to the second-round inflationary effects of the Middle East conflict, but domestic political uncertainty is likely to rise over the summer, which will curb activity further and is why we expect minimal UK house price growth of 1.5% this year.
“That will be magnified if we get a re-run of last year’s game of ‘guess the tax rise’ ahead of the autumn Budget.
“The Renters’ Rights Act has led to tight supply in the lettings market as more landlords sell up, which has ultimately made life tougher for tenants by pushing rents higher.
“The prospect of stricter regulations around energy performance certificates means other landlords are considering doing the same, which will keep upwards pressure on rents.
“It highlights the unintended consequences of government interventions in the housing market.”
