The UK housing market limped over the line at the end of 2025, but if you look past the headline numbers, something interesting is happening. Confidence is quietly returning.
According to the latest survey from the Royal Institution of Chartered Surveyors (RICS), activity on the ground remains subdued, but sentiment has shifted. And sentiment, historically, is where housing recoveries tend to start.
So, is the market finally turning a corner as we head into 2026? Let’s break it down—without the hype.
Buyer Demand: Still Soft, But Improving
December’s figures show buyer demand and agreed sales are still in negative territory, reflecting a sluggish year overall:
- New buyer enquiries: -24%
- Agreed sales: -19%
That’s not exactly champagne-popping territory. However, both measures improved on November, suggesting the market isn’t falling anymore—it’s flattening out.
In property terms, that matters. Markets don’t jump from “stuck” to “booming” overnight. They pause first.
The Big Shift: Forward-Looking Confidence
Here’s where the tone changes.
- Sales expectations over the next 3 months: +22%
- 12-month sales outlook: +34%
That’s the strongest forward-looking sentiment since late 2024—and more than double November’s reading.
Surveyors are pointing to two key drivers:
- Easing interest rate expectations
- The fog lifting after Budget uncertainty
In plain English: people are starting to believe again.
Housing Supply: Not Flooding In (Yet)
Supply conditions have stabilised, with new vendor instructions sitting at a net balance of 0%. That ends several months of decline, but it doesn’t mean there’s suddenly loads of stock.
Low appraisal activity suggests sellers are still cautious. Many are waiting for clearer signs that prices have bottomed out before making a move.
Translation: supply will improve—but slowly.
House Prices: Falling, But Losing Momentum
Nationally, prices are still edging down (-14%), but the pace of decline is clearly moderating.
What’s really striking is the regional split:
- London: -42%
- South East: -32%
- Scotland & Northern Ireland: still recording growth
This isn’t a single market—it’s several markets moving at different speeds.
Looking ahead:
- Short-term price expectations are close to flat
- +35% of respondents expect prices to rise over the next 12 months—the most optimistic reading since late 2024
That doesn’t guarantee growth, but it does suggest the floor may be forming.
A Two-Tier Market Is Emerging
As Jeremy Leaf rightly points out, we’re seeing a two-speed property market:
- Stronger interest in smaller, more affordable houses
- Softer demand for larger, higher-value homes
- Ongoing pressure on flats, where oversupply and rising outgoings are weighing on values
This isn’t unusual. When affordability is stretched, buyers focus on practicality first.
What This Means for 2026
The market isn’t “back”—but it’s no longer sliding backwards either.
With interest rates already easing and expectations of further reductions, the foundations are being laid for a more active start to 2026. Confidence is rebuilding, stock is stabilising, and buyers are beginning to re-engage.
The key test will be whether borrowing costs continue to ease in a sustained way. If they do, activity should follow.
For now, the mood music has changed—and in property, that’s often the first sign that something bigger is coming.
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Market commentary based on published industry data and commentary. This article is for information only and does not constitute financial or mortgage advice. Figures and sentiment are correct at the time of writing and may change.
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