UK house prices are facing further pressure as buyer demand and agreed sales weakened in September, while higher mortgage costs and expectations of interest-rate increases continue to weigh on the housing market.
The latest survey from the Royal Institution of Chartered Surveyors (RICS) shows that the market lost some momentum during the month, with more surveyors reporting falling prices than rising prices.
However, the survey does not point to a major collapse in the housing market. RICS respondents expect prices to remain broadly stable over the next 12 months, suggesting that the immediate outlook is weaker than the longer-term picture.
Buyer demand weakens
The RICS survey found that the net balance for new buyer enquiries fell to -22% in September, compared with -18% in August.
This was the first deterioration in the measure since March.
The figure nevertheless remains considerably better than the -41% recorded six months earlier, indicating that buyer demand is weaker but not at the lows seen earlier in the year.
Agreed sales also declined.
The net balance fell to -18% from -16% in August, although it remained less negative than the three-month average of -25%.
RICS said expectations for sales over the next three months also weakened, with the balance moving from -3% to -6%.
House prices remain under pressure
The RICS headline house-price balance fell to -32% in September, from -28% in August.
The measure had been becoming progressively less negative for four consecutive months before September’s deterioration.
A negative net balance means that more survey respondents reported prices falling than rising. It does not mean that every property in the UK fell in value.
Regional conditions also remain different.
Most areas of England recorded weaker price balances, with London particularly subdued. Scotland and Northern Ireland were more positive, with respondents in both markets reporting price increases.
RICS expects more pressure in the short term
The near-term outlook is less positive.
The RICS three-month house-price expectations balance was -24%, indicating that respondents expect further downward pressure on prices over the coming three months.
That does not amount to a forecast of a nationwide house-price crash.
Instead, it suggests that surveyors and estate agents expect the market to remain difficult as buyers and sellers adjust to higher borrowing costs.
The 12-month outlook is very different
Looking further ahead, the RICS 12-month house-price expectations balance was 0%.
That means respondents, collectively, expect a broadly flat trend in house prices over the next year.
The contrast is important.
The survey points towards weaker conditions in the final months of 2026, but it does not suggest that prices will necessarily continue falling throughout the following year.
Mortgage rates are adding pressure
Higher borrowing costs are an important part of the current housing slowdown.
Moneyfacts reported that the average two-year fixed mortgage rate had risen to 5.98%, while the average five-year fixed rate reached 6.00%.
The number of fixed mortgage deals priced below 5% also fell sharply during September.
Excluding deals available only in Northern Ireland, Moneyfacts said the number of sub-5% fixed-rate mortgages fell from 1,494 at the beginning of September to just nine.
That represents a dramatic reduction in the number of cheaper fixed-rate options available to borrowers.
Why mortgage rates can rise even when Bank Rate is unchanged
The Bank of England has maintained Bank Rate at 3.75%.
However, mortgage rates do not move solely in response to the current Bank Rate.
Lenders also consider wholesale funding costs and expectations about future interest rates.
The Bank of England said UK financial conditions had tightened, while quoted two-year fixed mortgage rates were around 95 basis points higher than before the conflict-related shock.
The central bank also noted that expectations of future interest-rate increases had risen.
That has created an additional obstacle for potential buyers already dealing with high property prices.
House prices have already stalled
The RICS findings follow separate data from Lloyds showing that UK house prices were unchanged in September.
The Lloyds House Price Index put the average property value at £298,441, with prices unchanged both from August and from September 2025.
The quarterly measure was down 0.2%.
The data provides another indication that the housing market has entered a period of very limited price growth.
Buyers are becoming more cautious
For people considering a purchase, higher mortgage rates can substantially affect affordability.
A buyer who could previously qualify for a particular mortgage may now face a higher monthly repayment for the same amount borrowed.
That can force prospective buyers to:
- Reduce their budget
- Increase their deposit
- Delay a purchase
- Look at smaller properties
- Negotiate harder on asking prices
This can also affect sellers.
When buyers have less borrowing capacity, properties that were previously priced within reach can become harder to sell unless asking prices adjust.
Supply is showing some improvement
There was one more positive development in the RICS survey.
The balance for new sales instructions moved to +6% in September, the first positive reading since mid-2025.
That suggests more properties were coming onto the market.
However, RICS said market appraisal activity remained below the level recorded a year earlier.
An increase in available properties does not automatically translate into higher sales if buyers remain cautious.
The rental market is moving differently
The sales market is not the only part of the property sector being monitored by RICS.
Tenant demand continued to rise in September, with the net balance reaching +23%.
At the same time, landlord instructions remained firmly negative, indicating continued pressure on the supply of rental properties.
RICS respondents also expect rents to increase over the next three months, with a net balance of +37% anticipating further rental growth.
This creates an important contrast between the sales and rental markets.
While prospective homebuyers are becoming more cautious, demand from renters remains strong.
What could happen next?
The immediate outlook for the UK housing market is likely to depend heavily on borrowing costs and household confidence.
If mortgage rates remain elevated, buyers may continue to have less spending power.
That could put pressure on sellers to reduce asking prices, particularly where properties have been priced above what buyers can currently afford.
However, if mortgage costs stabilise and buyer confidence improves, transaction activity could recover without requiring a large fall in national property prices.
The RICS survey’s 12-month balance of zero provides some support for the latter possibility, although it is only a measure of survey respondents’ expectations rather than a guaranteed outcome.
What the latest data means for buyers
For buyers, the current market may provide more room for negotiation than during periods of strong demand.
But lower house-price growth does not necessarily mean homes have become significantly more affordable.
If mortgage rates rise at the same time as prices stagnate, the cost of financing a property can offset any benefit from slower house-price growth.
For first-time buyers, the deposit remains another major barrier.
For existing homeowners looking to move, higher mortgage costs can also make selling and buying a more expensive proposition.
What it means for sellers
Sellers may need to pay closer attention to current market conditions.
The RICS figures suggest buyers are becoming more selective, while the gap between what sellers want and what buyers can afford can make transactions more difficult.
Properties that are competitively priced may attract more interest than homes that remain priced according to earlier market conditions.
The experience will also vary significantly by location and property type.
The UK housing market is slowing, but the outlook is not uniform
The latest evidence points to a housing market that has lost momentum rather than one experiencing a uniform collapse.
RICS respondents reported weaker buyer demand, fewer agreed sales and greater downward pressure on prices in September.
Mortgage rates have also risen sharply, with the average five-year fixed rate reaching 6%.
Yet the longer-term RICS outlook is considerably less negative.
Its three-month price expectation remains negative, while the 12-month balance is neutral.
That suggests the coming months could remain difficult for buyers and sellers, but it is too early to conclude that the current weakness will develop into a prolonged nationwide fall in property prices.
For households deciding whether to buy, sell or wait, mortgage affordability may therefore be just as important as the headline movement in house prices.
