Estate agents brace for further sales slump as housing outlook hits three-year low

Estate agents are preparing for a further slowdown in housing market activity, with sales expectations falling to their lowest level since July 2023.

The latest Royal Institution of Chartered Surveyors (RICS) Residential Market Survey paints a worsening picture for the housing market. Buyer demand remains weak, agreed sales are falling and house prices face renewed downward pressure.

Higher mortgage rates and uncertainty over the economic outlook are weighing heavily on confidence.

RICS reported a net balance of -17% for sales expectations over the next 12 months. This marks the weakest reading in more than three years.

Shorter-term expectations also remained negative, with a net balance of -11% anticipating weaker sales over the next three months.

Buyer demand weakens as sales fall

New buyer enquiries recorded a net balance of -24% in October, unchanged from September.

Almost every UK region reported either declining or stagnant demand.

Agreed sales also deteriorated. The net balance fell to -24%, compared with -18% the previous month. This represents the weakest reading in three months.

Meanwhile, fewer homeowners appear ready to put their properties on the market.

New instructions fell to a net balance of -8%, reversing September’s positive reading of +6%.

Market appraisals dropped to -34%, their weakest level since November 2025.

The figures suggest agents could face a thinner pipeline of new listings in the months ahead.

House prices under renewed pressure

The survey also points to further weakness in house prices.

The headline price balance slipped to -36%, down from -34% in September. It marks a second consecutive monthly deterioration following signs of stability over the summer.

London, the South East, East Anglia and the West Midlands recorded particularly weak price trends.

However, the picture remains mixed across the UK.

Northern Ireland continued to report firm price growth. Scotland and the North West of England also recorded modest increases.

Expectations for the year ahead have weakened sharply.

The 12-month house price expectations balance fell from zero to -17%. Respondents’ separate percentage forecasts suggest a relatively modest decline of around 1%.

Rental market faces further pressure

While sales activity struggles, conditions in the private rented sector continue to tighten.

Tenant demand returned to modest growth, with the quarterly net balance rising to +7% from -1%.

At the same time, landlord instructions remained firmly negative at -30%.

The imbalance between rental demand and available supply is adding to expectations of further rent increases.

The near-term rental expectations balance climbed to +41%, up from +29% previously. This is the strongest reading since early 2024.

For letting agents, the figures point to continued pressure on rental stock, even as the sales market loses momentum.

Mortgage rates threaten further slowdown

Tarrant Parsons, RICS head of market research and analysis, said: “Home buyer demand remains subdued, and respondents are bracing for a weaker year ahead for sales given the persistent macroeconomic challenges being faced.

“In accordance with this, the Bank of England’s rate rise was accompanied by a clear warning that policy may need to tighten further if higher energy costs feed through into wider prices.

“With inflation now projected to approach 5% next year, mortgage rates are likely to remain elevated for longer, thereby continuing to weigh on the market.”

Tom Bill, head of UK residential research at Knight Frank, said the Middle East conflict and its impact on borrowing costs were now driving the housing market outlook.

He commented: “The latest slump in confidence shows how decisions in Washington not Westminster are shaping the outlook for the UK housing market.

“Rising mortgage rates have put downward pressure on sales volumes and prices this year due to the energy price shock caused by the Middle East conflict.

“There is growing pressure on Donald Trump to find a diplomatic solution following the mid-term elections, which means borrowing costs have started edging lower over the last week, a trend that would only accelerate if a lasting ceasefire was agreed.”