Housing Market Steadies as Buyer Enquiries Improve, Surveyors Say

Britain's housing market showed further signs of stabilising in August, according to chartered surveyors, although high mortgage rates and worries about the cost of living continue to weigh on prices.

The Royal Institution of Chartered Surveyors' monthly residential market survey, published on 10 September, found that its house price balance edged up to -28 from -29 in July. The measure, which tracks the difference between surveyors reporting rising and falling prices, has improved steadily from -35 in April but remains firmly in negative territory.

Demand edging back

Activity indicators improved again, though all remain below zero:

• New buyer enquiries: a net balance of -19, the least negative reading since January and the fifth monthly improvement in a row
• Agreed sales: -17, up from a recent low of -38 in April
• New instructions to sell: 0, from -2 in July
• Sales expectations: -3 for the next three months, up from -13, and +6 for the year ahead

Tarrant Parsons, head of market research at RICS, said the results pointed to a market "gradually finding its footing". Surveyors in Northern Ireland and north-west England reported rising prices, but respondents nationally still expect values to slip over the next three months.

Estate agents said buyers and sellers remained anxious about the effect of the war involving Iran on living costs and borrowing rates.

Prices and mortgages

Other data underlined the pressure on values. Figures from Halifax, part of Lloyds Banking Group, showed average prices 0.4% lower than a year earlier in August, the first annual fall since November 2023, taking the typical property to £298,468. The South East (down 1.6%) and London (down 1.5%) were weakest, while Northern Ireland (up 6.9%) and Scotland (up 3.5%) continued to grow.

Nationwide, which uses its own mortgage data, still recorded annual growth, but it slowed to 1.6% in August, with an average price of £275,465.

Borrowing costs have risen sharply. Average two-year fixed mortgage rates are now above 5.6%, with five-year deals at similar levels, after major lenders lifted their rates by around 0.15 percentage points in recent weeks. Mortgage approvals have fallen to their lowest level since early 2024.

Rents set to climb

The lettings market is heading in the opposite direction. Tenant demand rose to a net balance of +18, while new landlord instructions fell to -14, tightening supply further.

A net balance of 44% of surveyors now expect rents to rise over the next three months, up from 33% in July, and they anticipate rental growth of about 3% over the coming year.

What happens next

The outlook depends heavily on interest rates. Financial markets are pricing in further increases from the Bank of England over the coming year as higher energy prices feed through to inflation, which would keep mortgage costs elevated.

For now, surveyors describe a market that has stopped deteriorating but is not yet recovering. Buyers who can secure finance have more room to negotiate, while renters face another year of rising costs as landlords remain cautious about adding properties.

Image: Richard Sutcliffe via Wikimedia Commons, CC BY-SA 2.0