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• Britain’s housing market remained weak over the past month as higher mortgage rates and economic uncertainty affected buyer confidence.
• A survey by the Royal Institution of Chartered Surveyors (RICS) showed house prices recorded their sharpest decline since November 2023.
• Buyer enquiries and price expectations improved slightly but overall market sentiment continued to stay subdued.
• Concerns over inflation, elevated oil prices and supply chain disruptions linked to geopolitical tensions added pressure on the property market.
• Rental prices continued to rise due to limited housing supply and steady demand across several UK cities.
Britain’s housing market remained weak over the past month as rising mortgage costs and economic uncertainty continued to affect buyer confidence, according to a survey released by the Royal Institution of Chartered Surveyors (RICS). Advertisement
The survey showed that the headline net balance for house prices dropped to minus 34 from a revised minus 25 in the previous month, marking the steepest decline in prices since November 2023. The data reflected continued pressure on residential property demand across several parts of the country.
Although indicators tracking new buyer enquiries and short-term price expectations improved slightly during the month, overall sentiment in the market remained soft. The housing sector has been facing uneven recovery trends in recent months, with property price readings from lenders Nationwide and Halifax showing mixed movements.
RICS said uncertainty linked to the economic impact of the Iran war, along with higher borrowing costs, continued to weigh on the market. The organisation’s head of research and analysis, Tarrant Parsons, said recent signals from the Bank of England regarding the possibility of further interest rate hikes to control inflation had created a difficult environment for homebuyers.
He stated that inflationary pressures driven by elevated oil prices and supply chain disruptions were adding to concerns around affordability and borrowing costs. According to Parsons, housing activity and overall market sentiment are expected to remain subdued until there is greater clarity on inflation and interest rate trends.
The pressure is being felt more strongly across southern England and London, where affordability levels remain stretched after years of rising property values and elevated mortgage costs. Analysts have noted that higher financing expenses are delaying purchasing decisions, particularly among first-time buyers.
Financial markets have also started pricing in two to three quarter-point interest rate increases by the Bank of England before the end of the year. Expectations around interest rates remain a key factor influencing mortgage pricing and housing demand across the UK market.
At the same time, the rental housing segment continued to see strong demand. RICS said rental prices kept rising rapidly during the month, even though the decline in landlord instructions was slightly less severe compared to the previous month. The shortage of available rental homes has remained a long-standing issue in several UK cities, contributing to sustained rental inflation.
The latest survey adds to broader concerns around the pace of recovery in Britain’s property sector, which has been dealing with affordability pressures, cautious lending conditions and slower economic growth over the past year.
Source Reuters
5th Jun, 2025
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