Housing Market in England and Wales Displays Tentative Recovery Signs
The housing market in England and Wales is showing tentative signs of recovery after a prolonged slowdown, according to the latest survey from the Royal Institution of Chartered Surveyors (Rics). Estate agents and surveyors report that inquiries from new buyers, agreed sales, and house prices became less negative in January, indicating a potential turning point in the market.
Improved Market Indicators and Surveyor Optimism
A monthly survey of chartered surveyors revealed a net balance of 35% of Rics members expect an increase in house sales over the next 12 months, marking the highest level of optimism since December 2024. The index measures the difference between agents reporting rising and falling confidence, suggesting a shift in market sentiment.
Demand from new buyers, while still negative with a net balance of -15% in January, showed diminished negativity compared to -21% in December and -29% in November. Similarly, the volume of agreed sales improved to a net balance of -9%, the least negative reading since June 2025. House prices also reached a potential turning point, with the house price gauge at -10%, up from a low of -19% in October, indicating fewer agents reported falling prices.
Challenges and Economic Pressures
Simon Rubinsohn, chief economist at Rics, commented, "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." The housing market had slowed considerably in the months leading up to the autumn budget due to uncertainty over potential tax changes on property transactions, including stamp duty and capital gains taxes, though neither was announced.
While some estate agents noted a "new year bounce" in activity post-budget, concerns from buyers about economic uncertainty, interest rates, and cost of living pressures persist. Rubinsohn added, "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."
Impact on Property Developers
Property developers Barratt Redrow and Bellway reported subdued activity in the months before the autumn budget. Barratt Redrow, the UK's biggest housebuilder, cut its dividend and saw a 13.6% drop in underlying pre-tax profits to £199.9 million in the six months to December, citing low consumer confidence and affordability challenges. It completed 7,444 homes and expects 17,200 to 17,800 for the year.
Bellway reported a 2.7% increase in completions to 4,702 homes in the six months to January, up from 4,577 in the same period in 2025, but noted customer demand was impacted by pre-budget uncertainty. These results highlight the ongoing challenges in the housing sector despite early recovery signs.
