UK house sales outlook is darkest since 2023 as mortgage rates bite, RICS says

British property surveyors are the most downbeat about the short-term outlook for house sales in more than three years, as rising mortgage rates compress demand, the Royal Institution of Chartered Surveyors (RICS) has said.

The October 2026 UK Residential Market Survey, published on Thursday, showed the outlook for house sales over the next 12 months falling to minus 17, the most pessimistic reading since July 2023. Surveyors expect the broadest drop in sales in more than three years.

The headline house price balance dropped to minus 36 last month, from September’s downwardly revised reading of minus 34, a slightly bigger fall than the minus 34 forecast in a Reuters poll of economists. It was the second consecutive monthly deterioration, after signs of stabilisation over the summer.

New buyer enquiries held at minus 24, with virtually every region reporting either falling or stagnant demand, while agreed sales fell to minus 24 from minus 18, the weakest reading in three months. Expectations for house prices over the next 12 months also deteriorated, falling to minus 17 from zero in September.

The findings come against a backdrop of renewed pressure on mortgage borrowing costs, after the Bank of England raised its Bank Rate to 4 per cent from 3.75 per cent last week, its first increase in three years. The rise has pushed mortgage rates higher and made buyers more cautious.

“Home buyer demand remains subdued, and respondents are bracing for a weaker year ahead for sales given the persistent macroeconomic challenges being faced,” said Tarrant Parsons, RICS head of market research and analysis.

There was one brighter spot in the survey. Expectations for growth in rents over the next three months climbed to plus 41, from plus 29, the strongest reading since early 2024, as the shortage of rental homes continues to push rents up.

Separate figures from Lloyds showed the average house price falling 1.2 per cent year on year in October, to £296,285, while mortgage approvals hit their lowest level since late 2023, underlining how quickly the market has cooled since the Bank of England’s rate rise.

Estate agents reported declines in house prices, buyer enquiries, agreed sales and new instructions to sell, with the weakness spread across the country rather than concentrated in one region.

For buyers, the survey points to a market in which prices are likely to soften further over the coming year, but in which borrowing costs remain the binding constraint. For sellers, it is a reminder that the optimism of the summer has faded, and that the housing market is heading into winter on a weak footing.