UK Housing Market Faces Sharp Slowdown as Buyer Demand Slumps

The UK housing market experienced a significant cooling in November, according to the latest Royal Institution of Chartered Surveyors UK Residential Market Survey. Buyer demand, sales activity, and new property listings remained firmly negative, as the sector continued to grapple with subdued sentiment following the autumn budget. Three quarters of survey responses were collected after the 26 November budget, which appears to have provided limited reassurance for market participants.

The most recent figures show a net balance of minus thirty two percent for new buyer enquiries compared with last November, marking the lowest level since late 2023. Agreed sales activity remained weak, posting a net balance of minus twenty three percent for November, little changed from the previous month. Expectations for sales improvement in the coming three months remain low. However, survey respondents project a net balance of plus fifteen percent for sales volumes over the next year, up from plus seven percent in October, reflecting cautious optimism about potential interest rate reductions by the Bank of England.

The market’s sluggishness is further underscored by a continued decline in new instructions, which posted a net balance of minus nineteen percent. The persistence of affordability challenges and elevated borrowing costs were cited as primary factors stalling market activity. A modest sense of relief was noted regarding budgetary changes, such as the introduction of a high value council tax surcharge limited to properties over two million pounds. Even so, prices are on a gentle downward trajectory, with London seeing sharper declines due in part to this new tax, while Northern Ireland and Scotland continued to record rising house prices.

Lettings activity mirrors these subdued conditions. The lettings market saw landlord instructions fall sharply, hitting a net balance of minus thirty nine percent. The impact of a new property income tax, set to increase basic, higher, and additional rates by two percent from April 2027, is anticipated to dampen landlord participation further. Tenant demand has cooled to its lowest reading since April 2020, yet ongoing shortages in rental availability are keeping rent expectations at elevated levels. Additional taxation in the budget is also expected to compound pressures in the lettings sector.

Overall, the survey highlights a housing market struggling to regain momentum. While the outlook for the coming year carries cautious optimism amid hopes of interest rate reductions, substantial affordability constraints and tax changes continue to weigh heavily on both homebuyers and landlords across the UK.