RICS warns rental supply is still falling

The latest RICS survey shows that tenant demand is broadly stable over the three months to February, but landlord instructions are still in decline.

The Royal Institution of Chartered Surveyors’ survey also shows more members are expecting to rise over the next three months.

Its UK Residential Market Survey also reveals that the housing market is still struggling to build momentum.

The organisation points to geopolitical tensions and wider macroeconomic uncertainty for affecting short-term expectations.

Mortgage rates to remain high

Tarrant Parsons, the head of market research, said: “February’s survey highlights renewed volatility in the market.

“While activity indicators at the start of the year suggested a tentative improvement, the deterioration in the geopolitical backdrop has clearly weighed on confidence.”

He added: “The recent rise in oil and energy prices has also increased the likelihood that mortgage rates will remain higher for longer.

“As a result, near-term expectations have softened.”

House price rises

RICS also says that new buyer enquiries weakened again last month and agreed sales are down.

However, surveyors are predicting increased activity over the next year with higher sales volumes.

Members also say that there was a small rise in house prices, though property values in London fell.

Northern Ireland, Scotland and the North West of England reported firmer price trends.

House prices over the year are still expected to rise, though at a lower rate than RICS has predicted previously.

Property sector reaction

Tom Bill, the head of UK residential research at Knight Frank, said: “Demand had been recovering after the uncertainty caused by November’s Budget, but the Middle East conflict will dampen sentiment during a traditionally busy period for housing transactions.

“People will still need to move but geopolitical instability will increase the mood of hesitation while rising mortgage rates due to energy price spikes will curb spending power.

“That said, a weak labour market is one reason that the underlying case for multiple rate cuts this year still stands and the longer-term impact on buyers and sellers hinges on how long the disruption lasts.”

Tim Green, of Green & Co, said: “The best early sign of activity in 2026 is the increased number of properties coming to the market.

“The recovery is likely to be led from the first-time buyer range, but despite a few green shoots, Spring has not quite arrived yet.

“There is downward momentum in confidence since the Iran conflict began with several respondents naming it directly.