The Royal Institution of Chartered Surveyors (RICS) Residential Market Survey revealed that buyer demand and sales volumes were still in negative territory, and surveyors did not expect this to improve in the next three months.
RICS said the survey captured the reaction to the Autumn Budget, as three-quarters of the sample was gathered after the event.
Surveyors returned a score of negative 32% for buyer demand over the month, a fall from negative 24% in October and the weakest reading since the end of 2023. Respondents said most parts of the UK were seeing a softening in buyer demand.
The reading for agreed sales was relatively unchanged, at negative 23% compared to negative 24% previously, but still indicated a slowing in sales activity.
Respondents predicted that sales would pick up slightly in the next three months, according to a score of negative 6%, but this was a weaker reading than the negative 3% given for the near-term expectation in October. RICS said this was consistent with a flat outlook for sales in the next three months.
Aldermore Insights with Jon Cooper: Edition 9 – Why lending strategy is becoming more central in buy to let
Sponsored by Aldermore
Sales are expected to rebound over the long term, as surveyors gave a score of 15% for the year ahead – more positive than the reading of 7% in the previous survey.
Fewer homes coming to market
Surveyors returned a score of negative 19% for new instructions during November, hinting at a slowdown in the flow of properties listed for sale. This was similar to the previous survey’s reading of negative 20%.
Surveyors said the volume of appraisals being undertaken was below levels seen a year ago, with a score of negative 40%. This was a more negative reading than previously and marked the fourth consecutive month where activity slowed. RICS said this suggested that the pipeline for new instructions would be subdued in the near term.
House price growth levels off
According to respondents, house prices declined in November, based on a score of negative 19% for the month. This was not as negative as the reading of negative 16% given in October, which RICS said indicated that price inflation may be flattening.
There were regional differences, with surveyors in London returning a score of negative 44%, the most negative reading across the UK. By contrast, respondents in Northern Ireland and Scotland suggested that house prices were rising.
In the near term, respondents gave a score of negative 15% for house prices, compared to negative 12% previously.
For the year ahead, this expectation was 24%, pointing to a rise in house prices over the long term. This was also the strongest reading for house prices over the long term since June and was a sentiment seen across nearly every region of the UK, except for East Anglia, where respondents were less optimistic.
Tom Bill, head of UK residential research at Knight Frank, said: “The barrage of property tax speculation before the Budget unsurprisingly soured sentiment among buyers and sellers. Now there is clarity, we expect existing transactions to accelerate before Christmas, and activity should remain relatively strong in early 2026.
“A downwards trajectory for interest rates will support demand but political uncertainty will become the key risk. The game of ‘guess the tax rise’ played in recent months could become a game of ‘guess the Chancellor’ if next spring’s local elections are as bad for Labour as the polls suggest.”
Tenant demand subsides
Surveyors gave a score of negative 22% for tenant demand in November, the weakest reading since April 2020.
Similarly, landlord instructions were in the negative at negative 39%.
Respondents said the rise in property income tax announced in the Autumn Budget was a reason for some of the slowdown in landlord instructions.
Regarding rental prices, near-term expectations were at 6%, indicating slight increases in the next three months. This was the flattest reading since the early stages of the pandemic.
Over the next 12 months, surveyors said rental prices would rise 2.5%, just slightly below the average 3% expectation given in the last six months.
Emma Cox, managing director of real estate at Shawbrook, said: “A decline in buying activity and cooling tenant demand could pose challenges for landlords heading into the new year.
“With little in the way of incentives or much-needed support for first-time buyers in the recent Budget, this looks set to continue as we close out 2025. As a result, professional landlords will likely turn to other, higher-yielding asset classes such as houses in multiple occupation (HMOs) and semi-commercial property, a trend we have seen throughout this year, in order to remain profitable in light of any headwinds. While the landscape appears uncertain in the short term, weakening house prices and favourable mortgage rates may encourage professional landlords to add to their portfolios.”
