UK housing market weakened in November amid budget worries

The UK housing market continued to weaken in November as agreed sales and buyer enquiries declined, data published by the Royal Institution of Chartered Surveyors showed Thursday.

London house prices were the hardest bit by UK government budget tax measures, the report said.

New buyer enquiries across the UK in November had a net balance of minus 32%, falling further from minus 24% in October and marking the weakest reading since late 2023.

For agreed sales, November's net balance of minus 23% is up a notch from minus 24% in October, still showing a continued downward pattern in sales activity.

In London, the net balance fell to minus 44%, now more negative than any other part of the UK, with RICS citing the introduction of the high valuation council tax surcharge.

It was announced in the UK government budget, is set to take effect in April 2028 and affects owners of residential property in England worth GBP2 million or more in 2026. Depending on the value of property, it is an extra recurring annual charge of between GBP2,500 and GBP7,500.

Near-term sales expectations in the UK stood at a net balance of minus 6%, weaker than minus 3% in October and mostly consistent with a largely flat outlook for sales for the coming three months.

Meanwhile, tenant demand cooled, with the net balance for landlord instructions standing at minus 39% in November. Respondents mentioned a new income tax on property announced in the budget as a factor that could further reduce new landlord instructions.

RICS Chief Economist Simon Rubinsohn said: "The housing market has been struggling for momentum for several months, and the recent budget announcements are unlikely to materially shift that picture. The ending of budget related uncertainty is welcome, but the fundamental challenges of affordability and elevated borrowing costs will in all probability keep activity subdued in the near term. That said, the twelve-month outlook has brightened somewhat, likely reflecting a growing sense that the Bank of England may have a little more scope to reduce interest rates than seemed plausible only a short while ago.

"Meanwhile in the lettings market, although tenant demand does appear to be softening the lack of stock is keeping rental expectations elevated and the additional tax levied on landlords in the budget will likely exacerbate this trend."