The worst of the housing slowdown may finally be passing. That is the tentative message from the latest RICS UK Residential Market Survey, which shows several key indicators moving in a less negative direction for a second month running, an early signal that the UK housing market outlook is improving for investors.
The June survey still paints a subdued picture. Inflation, the cost of living, domestic political uncertainty and global conflicts all continue to weigh on sentiment, according to the Royal Institution of Chartered Surveyors. But the direction of travel has changed.
Buyer demand still negative, but the least bad since February
New buyer enquiries recorded a headline net balance of minus 29 per cent in June. That remains firmly in negative territory, yet it marks an improvement on the minus 34 per cent posted in each of the previous two months and the least negative reading since February.
Newly agreed sales followed a similar pattern, at a net balance of minus 32 per cent against minus 35 per cent previously.
The forward indicators are where the shift is clearest. Near-term sales expectations improved to minus 16 per cent, up sharply from a low of minus 34 per cent in March, and respondents now expect sales volumes to be broadly flat over the next twelve months, with a net balance of plus 1 per cent.
Tarrant Parsons, RICS head of market research and analysis, said: “June’s survey results offer some cautious encouragement that the worst of the slowdown in market activity may be beginning to pass, with several key indicators moving in a less negative direction for a second consecutive month. That said, any nascent improvement remains fragile and is now being tested by renewed political uncertainty on the domestic front.”
That political dimension is familiar territory. Speculation over property taxation has already been blamed for pushing the housing market into a slowdown, and RICS respondents suggest those distractions have not gone away.
Supply is tightening while prices stay soft
If demand is stabilising, supply is heading the other way. New instructions dropped to a net balance of minus 23 per cent, down from minus 10 per cent previously and the weakest reading in over a year. Market appraisals also declined, suggesting a thin pipeline of fresh stock.
On pricing, the headline balance came in at minus 33 per cent, broadly unchanged from minus 34 per cent in May and minus 35 per cent in April. Near-term price expectations remain subdued but improved to minus 32 per cent from minus 44 per cent, and a net balance of plus 8 per cent of respondents now expect prices to rise over the next twelve months, up from plus 6 per cent.
Mortgage costs could yet provide a tailwind, with the Bank of England holding Bank Rate at 3.75 per cent while lenders trim fixed rates. Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “Falling mortgage rates could encourage prospective buyers, but affordability pressures and wider economic uncertainty can create caution, with some sitting on the fence until rates fall further.”
Lettings market moves in landlords’ favour
The rental side of the survey tells a story investors will recognise. Tenant demand picked up to a net balance of plus 18 per cent, the strongest reading since May 2025, while landlord instructions remained negative at minus 18 per cent.
With demand rising and supply still shrinking, a dynamic amplified by the continuing exodus of landlords from the private rented sector, surveyors expect rents to keep climbing, with projected rental growth of around 2.5 per cent over the next twelve months. That sits close to Rightmove’s forecast of 2 per cent rental growth for 2026.
What this means for investors
For portfolio investors, the survey suggests a window rather than a rebound. Jeremy Leaf, north London estate agent and a former RICS residential chairman, said those who needed to move were “negotiating hard and trying to anticipate the market’s direction of travel. The net result is prices and activity are holding up better than we dared hope, although we are not expecting a significant summer rebound, bearing in mind these distractions are likely to continue for a few more months at least.”
Soft prices, thinning stock and firming rental demand point one way. Buyers able to transact now face less competition, while the lettings data suggests income growth should hold up. If the RICS indicators keep improving into the autumn, that window may not stay open for long.
