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Estate agents are more upbeat about UK housing sales in the short term than at any point for more than a year thanks to falling interest rates and the resolution of Budget uncertainty.
The Royal Institution of Chartered Surveyors said on Thursday that its measures of sales expectations over the next three months rose to 22 in December, up from minus 4 in the previous month and the highest since October 2024.
The index, which measures the difference between the share of estate agents expecting rising and falling sales, is the first positive reading since June last year.
Sales expectations over the year ahead also strengthened further, with a net balance of 34 per cent of respondents expecting volumes to rise — more than double the level seen in November.
Surveyors pointed to “easing interest rate expectations and the clearing of Budget-related uncertainty” as key drivers behind the turnaround in mood, according to the survey.
Tom Bill, head of UK residential research at Knight Frank, said “the combination of clarity around taxation and the prospect of further rate cuts” had boosted demand.
But he warned that “domestic political risks, including questions over the future of [chancellor Rachel] Reeves and [Prime Minister Sir Keir] Starmer, could still undermine sentiment”.
There were months of speculation in the lead-up to November’s Budget about whether Reeves would introduce an overhaul of stamp duty or capital gains taxes paid on some primary residences, neither of which measures ended up being announced.
The Bank of England cut interest rates by a quarter point to 3.75 per cent in December, the sixth reduction in borrowing costs since 2024, and financial markets expect a further quarter-point cut once or twice this year.
In December, the quoted mortgage rates on a two-year fixed deal with 60 per cent loan-to-value dropped to an average of 3.78 per cent, down from 3.9 per cent in November and the lowest since July 2022, according to BoE data. While still historically elevated, it was well below its peak of 6.22 per cent reached in the summer of 2023.
Separate data published on Thursday by the Bank of England showed
its index tracking defaults on mortgages fell to minus 13 in the final quarter of 2025, the lowest in almost four years.
The figure, down from minus 8.1 in the third quarter, suggested “that the drag from interest rates on consumer spending is fading”, said Rob Wood, chief UK economist at consultancy Pantheon Macroeconomics.
Banks also reported a strong rise in household demand for credit card borrowing at the end of last year, after a dip in the third quarter, with a weaker rise in defaults.
Karim Haji, global and UK head of financial services at advisory firm KPMG, said the figures pointed to many households “turn[ing] to credit to cover the cost of Christmas”.
The Rics survey indicated that the number of homes coming to the market had stabilised after months of decline.
It also indicated that buyers’ enquiries were still declining, with a score of minus 24, and the same for agreed sales at minus 19. However, both measures improved slightly on the previous month, signalling that the downturn was “losing momentum”, the survey found.
The index tracking house prices was also negative “but the trend is clearly moderating”, according to the survey.
Tarrant Parsons, head of market analytics at Rics, said the UK residential market remained in a “prolonged soft patch” but there were “tentative signs of a shift in sentiment beneath the surface”.
If borrowing eased on a sustained basis this year, it “could provide the catalyst needed to drive a recovery in buyer demand”, he added.
Meanwhile, the demand for rental properties weakened further in December, and new landlord instructions stayed deeply negative at minus 39, underlining persistent supply constraints.
Jeremy Leaf, principal of the estate agent Jeremy Leaf & Co, said landlords were selling up due to worries about the Renters’ Rights Act, which comes into force this year and includes abolishing “no-fault” evictions. “Some aspiring first-time buyers were awaiting the outcome of the Budget before taking the plunge,” he added.