Residential market shows signs of early recovery in January 2026 – RICS
Price growth was strongest in Scotland and Northern Ireland, with the North West and North of England also showing gains.
Early signs showed the UK housing market started to recover in January 2026, according to the January 2026 UK Residential Survey from RICS.
New buyer enquiries improved for a third month, with the net balance up to -15% in January from -21% in December and -29% in November, showing less downward pressure on demand.
Agreed sales followed the same path, hitting a net balance of -9%, the least negative since June 2025.
The net balance for prices over the past three months stood at -10%, up from a low of -19% in October 2025.
Price growth was strongest in Scotland and Northern Ireland, with the North West and North of England also showing gains.
London, the South East, South West and East Anglia still lagged behind the national average, reflecting ongoing affordability issues, but there were some improvements in these areas.
The net balance for sales expectations over the next three months eased to 4%, showing short-term caution, while optimism for the next twelve months jumped to 35%, the highest since December 2024.
Price expectations showed a similar trend, with 43% of respondents expecting higher prices over the next year, the strongest since February 2025.
Tenant demand increased again in the lettings market, ending two quarters of flat or negative readings.
Landlord instructions remained negative, so rental prices were expected to keep rising.
Simon Rubinsohn, chief economist at RICS, said: “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.
“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.”
REACTION:
Tomer Aboody, director of MT Finance:
“With an increase in the number of buyers registering with agents, we are hopeful of a market recovery, although this is likely to be gradual.
“With interest rates at more affordable levels than was the case 12 to 24 months ago, buyers are more keen on moving and taking advantage of cheaper borrowing.
“While the London market is lagging behind the rest of the country due to high house prices and the prospect of a mansion tax as proposed by the Chancellor, some recovery is still visible with buyers on the whole willing to swallow the extra tax while some are perhaps hopeful that the next government will abolish it.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“Buyer enquiries and sales agreed, particularly for smaller houses and not so much flats, have improved considerably since the beginning of the year.
“This consistently-reliable lead indicator of change confirms what we have seen in our offices after a slower than expected few months – confidence is on the up.
“However, an increase in listings as well as appraisals, ongoing worries about the economy and slow pace of anticipated mortgage rate cuts, are keeping transaction lengths up and prices in check.
“Although we have found more tenants are ‘feeling the pinch’, the shortage of stock prompted particularly by landlords still selling up, has meant rents are holding up relatively well.
“Disappointingly, we are seeing little appetite from would-be investors for new buy-to-let opportunities so the supply/demand imbalance and upward direction of travel for rents is unlikely to change in the near term at least.”
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