The UK housing market is struggling to gain momentum in 2026 as buyer demand weakens, mortgage rates move above 5%, and global economic uncertainty weighs heavily on confidence. While the start of the year showed some tentative improvement in activity, new survey data suggests that the recovery is fragile and the property market remains under pressure.
According to the latest survey from the Royal Institution of Chartered Surveyors (RICS), buyer demand weakened further in February as inflation concerns, rising borrowing costs, and geopolitical tensions continued to shape housing market sentiment. The survey highlights a market that is not collapsing but is clearly struggling to rebuild strong activity levels.
Buyer demand falls 26% as confidence weakens
The most striking figure from the latest housing market survey is the sharp decline in buyer inquiries. A net balance of 26% of property professionals reported a fall in new buyer inquiries during February. This marks a clear deterioration compared with January, when the net balance reporting declines stood at 15%.
This drop in demand suggests that many potential buyers are becoming increasingly cautious. Higher mortgage rates, concerns about inflation, and uncertainty surrounding the global economy are all making households hesitant to commit to a home purchase.
When buyer inquiries fall, it typically signals slower activity across the entire property market. Buyers may delay decisions, negotiate harder on price, or simply step back from the market until borrowing conditions improve.
Agreed property sales remain subdued
The slowdown in buyer demand is also visible in completed transactions. The RICS survey shows that agreed property sales remain subdued, with a net balance of 12% of property professionals reporting a fall in sales.
While the numbers do not point to a dramatic crash in activity, they confirm that the housing market is currently operating at a slower pace. Estate agents and surveyors across the country are seeing fewer completed deals, reflecting the cautious mood among buyers.
Despite the current weakness, property professionals remain somewhat optimistic about the longer-term outlook. A net balance of 17% expect sales activity to increase over the next 12 months, suggesting that the market could recover if economic pressures ease.
House prices flat but regional trends diverge
House price movements remain mixed across the UK. Overall prices were broadly flat during February, although a net balance of 12% of professionals reported price declines.
However, regional variations are becoming increasingly noticeable. Some parts of the country are facing stronger downward pressure on property prices, while others continue to show resilience.
London, the South East, and East Anglia are currently experiencing the most significant downward pressure on prices. These regions tend to have higher property values, which means affordability challenges are more pronounced when mortgage rates rise.
In contrast, several other regions are still reporting firmer price trends. Northern Ireland, Scotland, and the North West of England are among the areas where housing markets appear more stable, supported by relatively stronger local demand and more affordable property prices.
Looking ahead, surveyors have become more cautious about short-term house price expectations. However, the longer-term outlook remains slightly positive. Over the next 12 months, a net balance of 33% of professionals expect house prices to edge higher.
One notable exception is London, where expectations for house prices over the coming year have cooled sharply.
Housing supply remains stable
On the supply side, the number of new homes coming onto the market has not changed significantly. New instructions from sellers remained broadly stable during February, suggesting there has been no immediate surge in new housing stock.
Stable supply combined with weaker demand often leads to slower price growth or modest price declines. Sellers may need to adjust expectations if buyer activity remains subdued.
Rental market facing growing shortages
While the sales market is losing momentum, the rental market is facing a different challenge: a shortage of available homes.
Tenant demand has remained broadly stable over the three months to February. However, landlord instructions have been described as “firmly negative,” meaning fewer rental properties are entering the market.
This imbalance between supply and demand is expected to push rents higher in the near term. Property professionals anticipate rental prices rising over the next three months as competition for available homes intensifies.
The shortage of rental properties has become a persistent issue across the UK, driven by a combination of landlord exits, regulatory changes, and higher borrowing costs for buy-to-let investors.
Mortgage rates above 5% add pressure
The housing market is also facing renewed pressure from the mortgage sector. In recent weeks, lenders have been withdrawing mortgage deals and raising rates as swap rates increase.
Some average mortgage rates have now moved above the 5% mark, adding another affordability challenge for buyers. Even a small increase in borrowing costs can significantly raise monthly repayments, particularly for first-time buyers or households borrowing large amounts.
Recent days have been described as some of the most turbulent for the UK mortgage market since the aftermath of the September 2022 mini-budget. Buyers can track current mortgage trends through Moneyfactscompare mortgage data.
Global uncertainty weighing on housing sentiment
Economic and geopolitical factors are also playing an important role in shaping housing market confidence. Rising oil and energy prices, combined with ongoing conflict in the Middle East, are increasing concerns about inflation.
If inflation remains elevated, interest rates may stay higher for longer than previously expected. That prospect is making both buyers and lenders more cautious.
Market analysts say the recent deterioration in the geopolitical backdrop has clearly weighed on housing market confidence. You can follow broader property market indicators through the RICS UK Residential Market Survey.
Outlook for the UK housing market
Overall, the UK housing market appears to be entering a period of slower activity rather than a dramatic downturn. Prices remain broadly stable, but buyer demand is clearly under pressure and sales volumes are subdued.
The next phase for the housing market will depend heavily on inflation trends and the direction of mortgage rates. If inflation pressures begin to ease in the coming months, borrowing costs could stabilise and buyer confidence may gradually return.
Until then, the property market is likely to remain cautious. Buyers are watching mortgage rates closely, sellers are adjusting expectations, and the housing sector continues to navigate a complex mix of economic and global uncertainties.
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