Housing Market in England and Wales Exhibits Early Recovery Indicators
The housing market across England and Wales is beginning to show tentative signs of recovery, according to the latest survey from the Royal Institution of Chartered Surveyors (Rics). Surveyors reported that inquiries from new buyers, agreed sales, and house prices were all less negative in January 2026, suggesting a potential turning point after a challenging period.
National Price Stabilisation and Improving Sentiment
At a national level, house prices appear to be stabilising. The net balance for prices over the past three months improved to -10%, marking a steady recovery from a low of -19% in October 2025. Although overall momentum remains weak, the consistent improvement over recent months indicates that the market may be entering the early stages of a recovery.
Rics members are expressing increased optimism about the year ahead. 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.”
Regional Disparities and Performance Variations
Regional performance continues to diverge significantly across the United Kingdom:
- Price growth remains strongest in Scotland and Northern Ireland.
- Upward trends are also reported in the North West and North of England.
- In contrast, London, the South East, South West, and East Anglia continue to lag behind the national average, reflecting ongoing affordability challenges. However, conditions in these areas have improved modestly as well.
Strengthened Medium-Term Outlook and Expectations
Sentiment around the medium-term outlook has strengthened notably. While expectations for sales over the next three months eased to a net balance of +4%, indicating short-term caution, optimism over the next twelve months surged to +35%. This is the strongest reading since December 2024.
Price expectations show a similar pattern, with +43% of respondents anticipating higher prices over the year ahead. This represents the most positive outlook since February 2025.
Lettings Market Dynamics and Rental Trends
In the lettings market, tenant demand edged higher in the three months to January, ending two consecutive quarters of flat or negative readings. However, supply remains constrained, with landlord instructions still firmly negative. As a result, rental prices are expected to continue rising in the near term.
Future Prospects and Key Dependencies
Overall, the January survey points to a housing market that may be on the cusp of recovery. While affordability pressures, economic uncertainty, and regional disparities persist, improving sentiment suggests conditions could strengthen as 2026 unfolds.
Simon Rubinsohn added: “While the strengthening twelve-month outlook is encouraging, near-term expectations remain relatively soft, reflecting ongoing economic uncertainty. 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.”
