UK Housing Market Takes a Knock as RICS Reports Falling Buyer Demand in 2026

The UK housing market has lost momentum after a promising start to 2026, with the latest RICS survey showing a sharp fall in buyer demand, agreed sales, and short-term price expectations. What had looked like a gradual uptick earlier this year has now shifted into a more cautious phase, as higher mortgage rates and global uncertainty weigh on confidence.

According to the data from the Royal Institution of Chartered Surveyors (RICS), the property market has moved onto a softer footing. Affordability pressures, rising financing costs, and the wider economic fallout from the Iran conflict are all contributing to weaker housing activity across much of the UK.

Why is Buyer Demand Weakening?

One of the clearest warning signs from the latest report is the sharp decline in new buyer enquiries, which dropped to a net balance of -39% in March, down from -29% in February. This marks the weakest reading since August 2023 and signals that many would-be buyers are stepping back from the market.

The decline in enquiries is closely tied to mortgage affordability. As swap rates rose in response to geopolitical tensions and inflation concerns, lenders repriced fixed-rate products higher, making monthly repayments less attractive for buyers already stretched by the cost-of-living crisis.

For first-time buyers especially, this creates a host of challenges:

• Higher monthly mortgage costs
• Larger affordability stress tests
• Slower decision-making amid uncertainty
• Reduced confidence in short-term price growth

Why Are Agreed Sales & House Prices Down?

The slowdown is not limited to buyer interest. Agreed sales fell to -34%, compared with -13% the previous month, reflecting a significant deterioration in transaction activity.

At the same time, the headline house price balance dropped to -23%, suggesting price reductions are becoming more widespread across the country. Short-term price expectations over the next three months weakened even further to -43%, highlighting growing expectations of modest price falls through spring and early summer.

This does not necessarily point to a housing crash. Instead, it reflects a market adjusting to higher borrowing costs, softer buyer demand, longer selling timelines and greater negotiation power for buyers. In many regions, this is likely to translate into more realistic asking prices rather than steep corrections.

Which UK Regions Are Seeing the Biggest Slowdown?

The latest RICS findings show the weakness is not evenly spread.

London, East Anglia, the South East, and the South West all reported weaker price readings than the national average, suggesting these regions are particularly sensitive to borrowing costs and affordability constraints.

By contrast, Scotland and Northern Ireland continue to report rising prices, showing how regional supply-demand imbalances are still playing a major role in local market performance.

This regional divergence is important for property investors. While southern England may see stronger buyer leverage and slower capital growth in the short term, some northern and devolved markets may remain comparatively resilient.

How Mortgage Rates Are Driving the Slowdown

The biggest factor behind the current housing market slowdown is the renewed deterioration in mortgage pricing.

RICS notes that what had been a cautiously improving picture was “knocked off course” by the macroeconomic fallout from the war in Iran, which pushed up mortgage rate expectations.

This is a classic example of how global events feed into domestic housing activity:

Even if the recent ceasefire holds, analysts expect mortgage rates to remain above the more competitive levels seen earlier in February, which means affordability pressures are unlikely to disappear immediately.

What This Means for Property Buyers & Sellers

For buyers, the current market may create stronger negotiation opportunities, particularly in regions where stock levels are rising and homes are taking longer to sell.

For sellers, pricing strategy becomes critical. Over-ambitious valuations in a softer market can quickly lead to stale listings and price reductions later.

Meanwhile, the slowdown in property transactions means the demand for rental properties will remain high, because tenants will not be able to buy homes of their own. This may continue to support rental yields.

RICS UK Housing Market Outlook for the Rest of 2026

The latest RICS outlook suggests the UK housing market is heading for a much flatter second half of 2026 than many had expected earlier in the year. While the 12-month house price expectation still sits slightly in positive territory at +2%, this points more towards stability than meaningful growth.

In practical terms, the most likely scenario for the rest of the year is a market that moves more slowly rather than one that falls sharply. House prices may soften modestly in the short term, transaction volumes are likely to remain subdued, and performance will continue to vary significantly from one region to another. Areas with persistent housing shortages may remain resilient, while affordability-stretched regions could see further weakness.

A gradual recovery is still possible, particularly if mortgage rates begin to ease later in the year. Lower borrowing costs would improve affordability, encourage more buyers back into the market, and help restore confidence among sellers who are currently hesitant to list.

The good news is that this does not point to a market crash. Instead, it reflects a period of recalibration after the stronger optimism seen at the beginning of 2026. Buyers are becoming more price-sensitive, sellers are having to be more realistic, and lenders remain cautious.

Conclusion

The UK housing market has lost momentum in 2026 as higher mortgage rates, weaker buyer confidence, and geopolitical uncertainty slow demand and agreed sales.

However, this points to market adjustment rather than a crash. Prices may soften modestly in some regions, while areas with stronger supply-demand dynamics could remain resilient.