Is the UK Housing Market Finally Turning a Corner?
After months of stagnation fueled by economic uncertainty, the UK housing market is showing “tentative signs of recovery,” according to recent reports from estate agents and surveyors. While challenges remain, a shift in sentiment and early indicators suggest a potential turning point for both buyers and sellers.
The Impact of the Autumn Budget and Beyond
Activity in the housing market slowed considerably leading up to the autumn budget in late November 2025. Concerns over potential changes to stamp duty and capital gains taxes contributed to a wait-and-see approach among prospective buyers. Fortunately, these fears didn’t materialize in the final budget, and a degree of stability has returned.
The Royal Institution of Chartered Surveyors (RICS) reported in January that its members are more optimistic than they have been since December 2024. Inquiries from new buyers, agreed sales, and house prices are all showing less negative trends. A net balance of 35% of RICS members now expect an increase in house sales over the next 12 months.
Demand and Pricing: A Closer Look
While optimism is growing, demand from new buyers remains down, with a net balance of -15% reporting a decrease in inquiries in January. Yet, this represents an improvement from -21% in December and -29% in November, indicating “diminished negativity.”
House prices are also showing signs of stabilization. Although more agents still report falling prices (-10% gauge reading) than rising prices, this is an improvement from a low of -19% in October. This suggests a potential bottoming out of the market.
Did you know? The price of the average UK home passed £300,000 for the first time in February 2026, according to Halifax.
Developer Activity Reflects Market Sentiment
Major property developers are also reflecting the cautious optimism. Barratt Redrow and Bellway both reported “subdued” activity in the months leading up to the autumn budget. Barratt Redrow saw a 13.6% drop in pre-tax profits, while Bellway experienced a 2.7% increase in completed homes.
Barratt Redrow cited low consumer confidence, economic and political uncertainty, and affordability challenges as key factors impacting their performance. Bellway noted that customer demand was impacted by uncertainty surrounding the government’s budget.
The Role of Mortgage Rates and Macroeconomic Confidence
Simon Rubinsohn, chief economist at RICS, emphasizes that any recovery will be “gradual” and dependent on the trajectory of mortgage rates and broader macroeconomic confidence. The cost of borrowing remains a significant factor for potential buyers.
Looking Ahead: What to Expect
The current situation suggests a slow and steady recovery rather than a rapid rebound. The housing market is highly sensitive to economic conditions, and continued uncertainty could easily dampen the nascent optimism. Key factors to watch include:
- Mortgage Rate Trends: Any significant changes in mortgage rates will directly impact affordability and demand.
- Economic Growth: A stronger economy will boost consumer confidence and support housing market activity.
- Government Policies: Future government policies related to housing and taxation could influence market dynamics.
FAQ
Q: Is now a good time to buy a house?
A: It depends on your individual circumstances. With prices potentially stabilizing and some signs of recovery, it could be a good time for those who are financially prepared.
Q: What is RICS?
A: RICS stands for the Royal Institution of Chartered Surveyors, a global professional body that sets standards for surveyors and provides market analysis.
Q: Will house prices continue to fall?
A: While more agents are reporting falling prices than rising prices, the rate of decline is slowing, suggesting a potential turning point.
Q: What impact did the autumn budget have on the housing market?
A: Uncertainty surrounding potential tax changes in the autumn budget led to a slowdown in activity, but the final budget provided some stability.
Pro Tip: If you’re considering buying or selling, consult with a qualified surveyor or estate agent to get personalized advice based on your local market conditions.
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