The housing market remains weak with supply conditions tightening in June, the latest Royal Institution of Chartered Surveyors (RICS) UK Residential Market Survey suggests.
While there are signals that the recent downturn may be easing, RICS members expressed ongoing concerns about the impact of inflation, the cost of living, domestic political uncertainty and global conflicts.
RICS members reported that new instructions to put properties on the sales market fell further into negative territory last month, dropping to -23% from -10% previously, the weakest reading in over a year.
Market appraisals also declined, suggesting the pipeline of homes coming to market might remain constrained in the months ahead.
NEGATIVE OUTLOOK
New buyer enquiries also remained negative, with a headline net balance of -29%, but this was a marginal improvement on the -34% recorded in the previous two months and marks the least negative reading since February. Newly agreed sales also remained subdued, posting a net balance of -32%, compared with -35% previously.
While these figures continue to indicate a challenging sales market, near-term sales expectations improved to -16%, up from a recent low of -34% in March. Looking further ahead, respondents expect sales volumes to remain broadly flat over the next twelve months, with a net balance of +1%.
HOUSE PRICE FORECASTS
House prices continue to face downward pressure at a nationally overall. The headline price balance came in at -33%, broadly unchanged from -34% in May and -35% in April. The South East and South West of England continue to report more negative price trends than the UK average, while Northern Ireland and Scotland remain more positive.
Near-term price expectations also remain subdued, although less negative than before, moving to -32% from -44%. Over the next twelve months, the outlook is modestly positive, with a net balance of +8% of respondents expecting prices to rise, up from +6% previously.
LETTINGS MARKET
In the lettings market, tenant demand picked up, with the headline net balance rising to +18%, the strongest reading since May 2025.
Landlord instructions remained negative at -18%, pointing to continued supply constraints. Against this backdrop, rents are expected to continue rising, with projected rental growth over the next twelve months standing at around 2.5%, the report suggests.
Tarrant Parsons, RICS head of market research and analysis, says: “June’s survey results offer some cautious encouragement that the worst of the slowdown in market activity may be beginning to pass, with several key indicators moving in a less negative direction for a second consecutive month. That said, any nascent improvement remains fragile and is now being tested by renewed political uncertainty on the domestic front.
“While the Bank of England left interest rates unchanged, uncertainty around the outlook for inflation and borrowing costs continues to weigh on sentiment, even if the recent decline in oil prices is a welcome development. Until there is greater clarity over both the political backdrop and the path of interest rates, housing market activity is likely to remain relatively subdued in the near term.”
Commenting on the report, Tom Bill, head of UK residential research at Knight Frank, says: “UK housing market activity is improving from a low base as the military conflict in the Middle East de-escalates and mortgage rates edge lower.
“However, there is no respite for buyers and sellers with a summer of speculation underway about which property taxes will rise in the Budget.
“Current propositions include a land value tax, which feels like a long-term wish rather than a short-term plan, and capital gains tax reforms that have been considered and discarded by previous administrations.
For the third year in a row, uncertainty will keep a lid on prices and sales volumes this summer.”
