Housing market shows signs of recovery but rents set to rise – RICS

House prices appear to have stabilised, but supply remains constrained and rents are expected to rise, according to the latest RICS survey.

The Royal Institution of Chartered Surveyors (RICS) says that although tenant demand has increased, the ongoing imbalance between supply and demand is pushing rents higher.

The survey found that a net balance of +28% of respondents expect rental prices to increase in the near term.

Supply has declined

In the lettings market, the survey shows tenant demand edged higher in the three months to January, with a net balance of +13% reported.

This brings to an end two consecutive quarters in which readings were flat or slightly negative.

However, supply has declined, with the net balance for landlord instructions now standing at -24% and rents expected to rise.

The sales market in January 2026 saw subdued housing market activity, but saw some signs of positive growth.

According to the RIS survey, house prices at a national level appear to be stabilising, with the net balance for prices over the past three months standing at -10%, improving steadily from a low of -19% in October 2025.

However, regional disparities are widening, with price growth remaining strongest in Scotland and Northern Ireland. Upward trends are also being reported in the North West and the North of England. In contrast, London, the South East, South West and East Anglia continue to lag behind.

New buyer enquiries improved again in January, with the net balance rising to -15%, up from -21% in December and -29% in November, signalling easing downward pressure on demand.

Market conditions may be improving

RICS chief economist, Simon Rubinsohn, says there are signs the housing market is improving in the first few months of 2026.

He said: “There are early signs that market conditions may be improving after a challenging period, although activity levels are still subdued, meaning any recovery is likely to be gradual. While the strengthening twelve-month outlook is encouraging, near-term expectations remain relatively soft, reflecting ongoing economic uncertainty.

“Whether this tentative improvement develops into sustained momentum will depend heavily on the trajectory of mortgage rates and broader macro confidence over the coming months.”

RICS reports that expectations for sales over the next three months eased to a net balance of +4%, reflecting short-term caution. However, optimism over the next twelve months has surged to +35%, the strongest reading since December 2024.

Price expectations show a similar pattern, with +43% of respondents anticipating higher prices over the year ahead, the most positive outlook since February 2025.