The UK housing market is showing renewed signs of weakness as rising mortgage rates weigh on buyer demand and agreed sales, according to RBC Capital Markets, which warned that the autumn selling season had stalled.
The October Royal Institution of Chartered Surveyors (RICS) survey showed new buyer enquiries falling to a net balance of -24%, from -22% in September, while agreed sales dropped to -24% from -18%, their weakest reading in three months.
RBC said the deterioration pointed to continued pressure on housebuilders, with affordability constraints, elevated borrowing costs and cautious sellers weakening the pipeline of transactions that supports reservations and revenue.
Forward-looking indicators also worsened, with three-month sales expectations falling to -11% from -6%, while the 12-month outlook dropped to -17%, its most pessimistic reading in some time.
House prices continued to weaken, with the RICS net balance slipping to -36% from -34%, while 12-month price expectations turned negative at -17%, implying a modest decline of about 1% over the coming year.
RBC expects the conditions to put further pressure on reservation rates at listed housebuilders, increase the use of sales incentives and encourage caution over land acquisitions.
Surveyors reported developers mothballing sites and some entering administration, particularly at the lower end of the market, while fewer new instructions suggested the supply of second-hand homes was also weakening.
The rental market offered a contrasting picture, with tenant demand returning to positive territory at +7%, while landlord instructions remained negative at -30%.
Three-month rent expectations rose to +41%, their strongest reading since early 2024, as landlords continued to leave the sector.
RBC said the outlook had deteriorated since September, although it identified Scotland and the North West as relatively resilient regions.
