RICS Survey: Housing Downturn Eases But Surveyors Warn On Fragile Recovery

The latest Royal Institution of Chartered Surveyors (RICS) residential market survey shows the UK housing downturn is losing momentum, with new buyer enquiries and agreed sales both improving on a net balance basis for the first time in several months. Yet the professional body's own language is telling: sentiment among surveyors remains "fragile", a description that should give investors pause before reading too much optimism into the headline numbers. The net balance for new buyer enquiries moved into modestly positive territory, while price expectations for the next three months turned less negative across most regions — improvement, certainly, but not yet the broad-based recovery that would justify aggressive repricing of portfolios.

For UK property investors, the distinction between "less bad" and "genuinely good" matters enormously right now. Transaction volumes have been running roughly 15–20% below the five-year pre-pandemic average for much of the past 18 months, squeezed by higher mortgage rates, stamp duty changes and stretched affordability. A stabilisation in enquiries is the first green shoot in that context, but surveyors are explicit that respondents still describe conditions as inconsistent between regions and price bands. That nuance is precisely why landlords and developers should treat this survey as a signal to monitor rather than an all-clear to expand exposure aggressively.

Regionally, the picture continues to diverge sharply. London and the South East, including commuter markets in Surrey, remain the most subdued segments, weighed down by higher average price points that interact badly with mortgage rates still sitting above 4% for many two- and five-year fixes. By contrast, northern regional cities — Manchester, Leeds, Liverpool and Newcastle — continue to show comparatively resilient buyer interest, supported by lower average price-to-income ratios and stronger rental yields that keep buy-to-let investors active even as mortgage costs bite. Birmingham sits somewhere in between, benefiting from infrastructure investment and city-centre regeneration but still exposed to the same affordability pressures dragging on the wider Midlands market. Surveyors in the North West and Yorkshire have reported the most consistent uplift in new instructions, suggesting sellers there are more confident of finding a buyer than their southern counterparts.

The implications for different market participants are not uniform. First-time buyers, who make up a disproportionate share of transactions in regional cities, stand to benefit most immediately from any softening in mortgage pricing, particularly if swap rates continue to ease and lenders pass through reductions to two-year fixed products. Buy-to-let landlords face a more complicated calculus: rental demand remains structurally strong — RICS's companion lettings data continues to show tenant demand outstripping instructions in most parts of the country — but many landlords are still recalibrating portfolios in response to tighter regulation, including looming Renters' Rights Act reforms and tax treatment changes that have eroded net yields since 2016. Commercial and institutional investors, meanwhile, are watching residential sentiment less for direct exposure and more as a leading indicator of consumer confidence that feeds into retail, leisure and mixed-use development viability.

Developers have perhaps the clearest read-through. A tentative recovery in buyer enquiries, if sustained, supports the case for releasing stalled sites back into build programmes, particularly in the regional cities where absorption rates have held up better than in London. However, build cost inflation, still running above general CPI in several trades, means margins remain tight, and volume housebuilders are unlikely to accelerate delivery meaningfully until they see at least two or three consecutive months of improving sales data rather than a single survey uptick. Land values in secondary locations have already adjusted downward over the past 18 months, and a genuine sentiment recovery could see that repricing stabilise before spring 2026.

Looking ahead six to twelve months, the most plausible scenario is a gradual, uneven normalisation rather than a sharp rebound. Much depends on the Bank of England's rate trajectory: further base rate cuts, if delivered through late 2025 and into 2026, would likely translate into cheaper mortgage products and could convert the current improvement in enquiries into a more durable increase in completed transactions. Absent that, the risk is that this survey marks a temporary bounce rather than a turning point, particularly if fiscal policy — including any further tinkering with stamp duty thresholds or capital gains rules — reintroduces uncertainty ahead of the Autumn Budget cycle. Investors with a regional, income-focused strategy in cities such as Manchester and Leeds are better positioned to weather that uncertainty than those concentrated in higher-value London and Surrey markets, where affordability constraints remain the binding factor on any recovery.