Buyer demand dropped sharply in February as geopolitical uncertainty and inflation concerns weighed on the housing market, according to the latest RICS UK Residential Market Survey. The net balance for new buyer enquiries fell to minus 26 percent, down from minus 15 percent in January.
Several surveyors cited the Iran conflict directly as undermining confidence, with the recent spike in oil and energy prices increasing the likelihood that mortgage rates will remain higher for longer.
Regional divide widens as London prices fall
House prices remained broadly flat nationally, with the headline price net balance registering minus 12 percent – only marginally weaker than the previous month. However, regional divergence is pronounced.
London saw the sharpest downward pressure at minus 40 percent, followed by the South East at minus 24 percent and East Anglia at minus 26 percent. In contrast, Northern Ireland, Scotland and the North West of England continue to report firmer price trends.
Near-term price expectations turned notably more cautious, with the balance falling to minus 18 percent from minus 6 percent in January. Over a 12-month horizon, sentiment remains positive overall at plus 33 percent – though in London, that measure dropped sharply from plus 56 percent to just plus 7 percent.
Lettings market shows familiar strains
This follows Landlord Knowledge’s report earlier this week showing rental competition at a six-year low. The RICS data reinforces a similar trend: tenant demand was broadly stable at plus 2 percent over the three months to February, but landlord instructions remained firmly negative at minus 27 percent.
Against that backdrop, plus 20 percent of survey participants expect rents to rise over the coming three months. The ongoing shortage of rental stock continues to underpin upward pressure on rents even as tenant demand softens.
Tim Green FRICS of Green & Co. (Oxford) Ltd said: “The best early sign of activity in 2026 is the increased number of properties coming to the market. The recovery is likely to be led from the first-time buyer range, but despite a few green shoots, Spring has not quite arrived yet.”
Ian Perry FRICS of Perry Bishop noted: “Definite green shoots across the board, although Iran conflict may have a negative effect.”
Tarrant Parsons, RICS Head of Market Research & Analytics, said: “February’s survey highlights renewed volatility in the market. While activity indicators at the start of the year suggested a tentative improvement, the deterioration in the geopolitical backdrop has clearly weighed on confidence.” He added that maintaining the positive 12-month outlook will depend on the recent spike in inflationary pressures easing in the months ahead. The full survey report is available on the RICS website.
What this means for landlords
- If you’re selling in London or the South East: Expect buyer hesitancy and potential price negotiations – the capital’s premium is under renewed pressure.
- Watch for: Mortgage rate expectations – if energy prices stay elevated, rate cuts may be pushed back further, keeping buyer activity subdued.
- Bottom line: The rental supply squeeze continues to support landlords with sitting tenants, but those looking to sell into the sales market may face longer marketing times in southern regions.
Editor’s view
The Iran conflict has done what domestic policy could not – spooked the housing market just as spring activity was building. For landlords, the irony is that the same uncertainty depressing sales is likely to keep tenants renting longer. Expect a two-speed market through 2026: softening sales values in the south, but sustained rental demand everywhere.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 12 March 2026
Sources: RICS UK Residential Market Survey February 2026
Related reading: Rental competition falls to six-year low as tenant demand drops 14%
