UK estate agents are grappling with weakening demand and longer transaction times as the latest RICS Residential Market Survey shows sales slowing and prices softening in most regions.
New buyer enquiries fell for a second month in a row, with a net balance of -17% in August, while agreed sales recorded a sharper decline at -24%.
Looking ahead, agents expect activity to remain subdued, with sentiment over the next year turning largely flat.
House prices are now drifting lower at the national level, with a balance of -19%. East Anglia and the South West are seeing some of the steepest falls, while Northern Ireland remains an outlier with prices still climbing.
QUALITY VS QUANTITY
Vendors are also proving more hesitant, with new instructions slipping into negative territory for the first time since June 2024.
Jeremy Leaf, north London estate agent and a former RICS chairman, says: “Demand is weakening but we have continued to agree sales of houses in particular over the past few weeks during and since the summer holidays.
“However, quality is trumping quantity in terms of viewing numbers in our offices at the moment. On the other hand, flats are proving more challenging to sell mainly due to the amount of choice.
“Overall, listings are increasing faster than enquiries, making transactions even more protracted and resulting in softening prices.
“Around 25% of our buyers and sellers too seem to have paused since rumours of additional property taxes being introduced in the Budget began circulating.”
WEAKENING LETTINGS MARKET
The lettings market is also under strain, with surveyors reporting the sharpest fall in landlord instructions since the early months of the pandemic. Rental growth expectations remain strong, but affordability pressures are mounting.
Leaf adds: “We have noticed recently many tenants appear to have reached an affordability ceiling just as we are approaching the busiest time of the year for lettings activity.
“Many are finding it increasingly difficult to meet what they perceive as unrealistic landlord aspirations for new and renewed rents despite the ongoing drop in stock partly prompted by landlords leaving the sector.”
With fiscal uncertainty and limited supply continuing to shape both sales and lettings, agents are preparing for a quieter autumn market, marked by longer completion times and increasingly price-sensitive buyers.
SUPPLY NOT MEETING DEMAND
Russell Anderson, Commercial Director of Mortgages at Paragon Bank, says: “A decline in landlord instructions noted by surveyors is further evidence that supply is failing to meet the continuing demand for privately rented homes.
“Survey respondents also anticipate further rent rises, a primary symptom of this imbalance between supply and demand. In addition to making it harder for would-be buyers to save towards their first home, undersupply of rented property also limits the choice of homes available to tenants.
“This has a negative indirect impact on the economy as rented accommodation provides flexibility that enables people to move for work or study with minimal friction.”
VIABLE INVESTMENT
And he adds: “To address this, we need to ensure that investment in the private rented sector remains viable.
“That means creating an environment where landlords feel confident to grow and maintain their portfolios to the high standards that renters rightly expect.
“Policymakers must consider the long-term impact of regulation and taxation on landlord confidence and behaviour. A balanced approach that protects tenant rights while encouraging responsible investment is essential if we’re to see a healthier, more sustainable rental market.”
