The Royal Institution of Chartered Surveyors (RICS) UK Residential Survey for March 2026 has found that rising borrowing costs and wider geopolitical uncertainty, such as the conflict in the Middle East, are having a significant impact on buyer confidence and sales activity.
While the lettings market has remained more resilient than other areas, there continues to be a mismatch between demand and supply. Tenant demand rose to a net balance of +10% in March, while landlord instructions stayed negative at -25%.
Survey respondents said that they expect this imbalance to keep pushing rents higher, with near-term rental expectations rising to +29%.
Meanwhile, new buyer enquiries fell to a net balance of -39%, down from -29% in February, marking the weakest reading since August 2023. Agreed sales also dropped to a net balance of -34%, down from -13% last month.
Short-term sales expectations also fell sharply, from -4% in February to -33% in March. For the next 12 months, sales expectations slipped to -1%, indicating a broadly flat market rather than the modest recovery view seen previously.
House prices also showed renewed signs of softening. The headline price balance fell to -23% in March, down from -14% and -10% in the prior two months, signalling broader downward pressure on values. Expectations for the next 12 months moved down to +2%, suggesting little overall price growth in the year ahead.
Overall, the March results suggest the housing market has moved onto a softer footing as it contends with affordability pressures, higher financing costs and global instability, all of which are dampening activity. Although the longer-term outlook is not yet signalling a severe downturn, the survey indicates that the optimism seen earlier in the year has largely faded.
“The mood across the UK housing market has shifted markedly over the past couple of months,” Tarrant Parsons, head of market research and analysis, RICS, said. “What had been a cautiously improving picture for activity has been knocked off course by the wider macro fallout from the Middle East conflict, as the renewed deterioration in the mortgage rate outlook has proved particularly challenging.
“Indeed, with average fixed rates climbing back above 5% according to some sources, it is unsurprising that buyer demand has softened. The path ahead hinges on whether or not recent surges in oil and energy costs begin to reverse in what remains a highly uncertain geopolitical environment.”
Christopher Clark FRICS 7Ely Langley Greig, added: “It’s impossible to know what is happening to the residential market at the moment. Only time will tell whether the Middle East conflict escalates or reaches a resolution, and the outcome of that war will determine how the market performs in the months and possibly years to come.”
Trevor Brown FRICS, of Trevor Brown Surveyors, commented: “Entering what has traditionally been the strongest buying/selling months, the market remains sluggish. Most of our (survey) clients are ‘have to move’, not 'want to move'. National and international uncertainty remains, and prices are stagnant. Sales volumes are reported to be low."
