UK housing market buyer demand fell to -22% in September as higher rate expectations weighed on confidence across the country
Renewed expectations of higher interest rates pushed UK housing market activity lower in September. Buyer demand softened and agreed sales fell again, according to the Royal Institution of Chartered Surveyors (RICS) UK Residential Market Survey.
September marked the first setback for buyer enquiries since March. The net balance for new enquiries dropped four points to -22%, though that still leaves it well clear of the -41% trough hit six months ago.
Sales completions weakened in parallel, with the net balance edging to -18%. Forward-looking indicators softened too, with the three-month sales expectations balance moving to -6% from -3%.
Tarrant Parsons, RICS head of market research and analysis, said the reset in rate expectations was the primary driver. “A renewed rise in interest rate expectations has created a fresh headwind for the housing market, with buyers becoming a little more cautious and sales activity losing some momentum this month,” he said. “Even so, the latest results do not point to any significant shift in direction.”
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What the numbers say about supply and prices
On the supply side, new instructions turned positive for the first time since mid-2025, with the balance reaching +6%. Appraisal activity, however, has not kept pace — surveyors report that homeowners considering a move are still holding back at a rate below last year.
Prices slipped further into negative territory. September’s headline price balance came in at -32%, down from -28% the previous month and unwinding the gradual improvement seen since May.
Surveyors are more cautious over the near term, with the three-month price expectations balance at -24%, though the 12-month reading is flat at zero. This points to stabilisation rather than a sustained decline.
London underperformed the rest of the country, posting a weaker price balance than the national reading. England’s other regions were broadly negative too. The outliers were Northern Ireland and Scotland, where prices continued to edge higher.
As UK mortgage rates climbed to a three-year high, rate-sensitive buyers were the first to step back. This was most visible in the flat market and outer London.
What does Budget uncertainty mean for the UK housing market this autumn?
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said buyer interest had picked up since the summer. It had not improved by as much as agents had hoped.
“When confidence is not particularly strong, as now, uncertainty over the direction of travel for mortgage rates, inflation — even the Budget — weighs more heavily on decision-making,” he said.
“More time taken before offers are submitted, particularly for flats in view of the amount of choice, and protracted transactions are the result.”
Tomer Aboody, director of specialist lender MT Finance, struck a bleaker note. “Higher interest rates, higher inflation and higher taxes are an obvious recipe for disaster, not just for the housing market but the wider economy,” he said. “Buyers and sellers are very hesitant, particularly with the Budget coming up later this month.”
The autumn Budget looms as the next flashpoint for sentiment. The combination of borrowing cost pressures and fiscal uncertainty has compounded throughout 2026, as growing headwinds across the UK housing market have illustrated.
Lettings market diverges sharply
While the sales market stalled, the rental sector moved in the opposite direction. Tenant demand strengthened for a third straight month, with +23% of surveyors reporting an increase. Landlord instructions stayed firmly in negative territory, keeping supply constrained.
Rental growth expectations reflect that imbalance. Looking across the next quarter, +37% of contributors anticipate further rent increases. This is lower than August’s +44% reading but substantially above the +27% average for the first half of 2026.
The contrast between a constrained lettings market and a hesitant sales market is relevant context for brokers advising landlord clients. The question of whether buy-to-let demand will translate into mortgage activity this autumn depends heavily on how rate expectations move post-Budget.
Swap rate volatility has already been reshaping mortgage pricing ahead of the autumn statement. The Budget represents the clearest near-term signal on whether the current UK housing market softness deepens or stabilises. The weeks ahead are a critical window for client communication.
