Buyer demand and agreed sales remained in negative territory in May, but there were some signs of the market beginning to stabilise, the latest index from the Royal Institution of Chartered Surveyors found.
New buyer enquiries recorded a net balance of -34% in May, unchanged from April, meaning a greater number of respondents reported a fall in new enquiries than an increase.
Agreed sales were also unchanged from April, with a net balance of -37% and the reading for house prices remained at -35% for the second consecutive month.
Respondents in the South East and East Anglia reported particularly weak pricing conditions, while Northern Ireland continued to see firm house price growth.
Looking ahead, short-term sentiment remained cautious, although near-term sales expectations improved slightly to -25%, compared with -32% and -34% in the previous two surveys.
Over a 12-month horizon, sales expectations edged into positive territory, with a net balance of +2% expecting activity to improve.
Near-term house price expectations remained negative, with a net balance of -45% anticipating further falls over the next three months.
However, respondents were more optimistic over the year ahead, with a net balance of +6% expecting prices to rise.
The rental market continued to face a supply and demand imbalance
Tenant demand increased, with a net balance of +14% of respondents reporting growth, while landlord instructions remained firmly negative at -28%.
As a result, rental expectations strengthened, rising to a net balance of +36%, the highest reading since May 2025.
The survey also showed that transactions are taking longer, with the average period from listing to completion reaching 21.5 weeks — the longest since records began in 2017.
RICS head of market research and analysis Tarrant Parsons says: “The latest survey data suggest the recent downturn in activity may be beginning to stabilise, with several key indicators broadly holding steady.
“However, as they remain in negative territory, it would be premature to interpret this as the start of a recovery.
“The decline in CPI inflation to 2.8% in April provided some temporary relief, but the Bank of England has signalled that further inflationary pressures are likely as higher energy costs continue to pass through.
“Against this backdrop, the prospect of further rate rises cannot be dismissed, and until there is greater clarity, market sentiment is likely to remain fragile.”
Shawbrook managing director of real estate Emma Cox says: “While it’s still too early to call a turning point, the improvement in near-term sales expectations is encouraging and suggests confidence may slowly be returning to the market.
“The rental sector continues to tell a different story, with tenant demand and rent expectations both increasing.
“For landlords, that ongoing imbalance between supply and demand may continue to support rental growth in the months ahead.”
Former RICS residential chairman Jeremy Leaf says: “Downward pressure remains on the price of flats in particular due principally to worries about the longer-term impact of war in the Middle East on the cost of living.
“On the other hand, viewings are steady and the overwhelming majority of agreed sales are staying that way although they are lengthening as it becomes increasingly tricky to inject urgency while choice in most price ranges is plentiful.”
On the rental sector he adds: “In our offices, concerns about affordability are certainly keeping letting activity under control.
“Rents would probably have otherwise softened further if it wasn’t for the shortage of stock prompted by the investment property sell-off in the period leading up to the introduction of the Renters’ Rights Act.
“Demand remains relatively strong, partly reinforced by higher mortgage costs which are persuading tenants to continue renting rather than try to purchase.”