The UK’s housing market lost momentum in March as buyer confidence and sales activity both declined, according to the latest RICS UK Residential Survey.

RICS said that rising borrowing costs and wider geopolitical uncertainty stemming from the conflict in the Middle East has weighed heavily on market sentiment.

New buyer enquiries fell to a net balance of -39%, down from -29% in February, marking the weakest reading in the RICS survey since August 2023. RICS reported that agreed sales also deteriorated, dropping to a net balance of -34%, from -13% in February.

RICS said its survey findings point to a market “increasingly pressured by inflationary concerns”, in addition to higher mortgage costs. Short-term sales expectations fell sharply to -33%, compared with -4% in February, suggesting buyers are expecting activity to weaken further over the coming months.

Head of market research and analysis at RICS, Tarrant Parsons, commented: “The mood across the UK housing market has shifted markedly over the past couple of months.

“What had been a cautiously improving picture for activity has been knocked off course by the wider macro fallout from the Middle East conflict, as the renewed deterioration in the mortgage rate outlook has proved particularly challenging.”

RICS, the professional body representing chartered accountants, stated that its March results suggest the housing market has “moved onto a softer footing”, with affordability pressures, higher financing costs and global instability combining to dampen activity.

While the longer-term outlook is not yet signalling a severe downturn, RICS warned this indicates that the optimism seen earlier in the year has “largely faded”.

“With average fixed rates climbing back above 5% according to some sources, it is unsurprising that buyer demand has softened,” added Parsons. “The path ahead hinges on whether or not recent surges in oil and energy costs begin to reverse in what remains a highly uncertain geopolitical environment.”

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