UK housing demand weakened in February as geopolitical tensions and higher energy prices raised fears mortgage rates could remain elevated.

Summary:

• The RICS house price balance fell to -12 in February, weaker than January’s -10 and the -9 expected by economists.

• The survey indicates more respondents reporting falling prices than rising ones.

• New buyer enquiries dropped sharply to -26 from -15, the lowest level since December.

• The survey period overlapped with the start of the U.S.–Israel war with Iran.

• Higher energy prices have raised concerns that mortgage rates could stay elevated for longer.

• Near-term sales expectations slipped to -2, the weakest since November.

• House price expectations fell sharply to -18 from -6.

• Tenant demand remained steady while new landlord instructions stayed deeply negative.

Britain’s housing market lost momentum in February as buyer demand weakened amid rising geopolitical uncertainty and growing concerns that mortgage rates could remain elevated due to higher energy prices.

A survey by the Royal Institution of Chartered Surveyors (RICS) showed its house price balance slipped to -12 in February, down from -10 in January and weaker than economists’ expectations of -9 in a Reuters poll. The negative reading indicates that more survey respondents reported falling prices than rising ones.

The deterioration in housing sentiment comes as geopolitical tensions intensified following the outbreak of the U.S.–Israel war with Iran on February 28, which pushed global energy prices higher and heightened economic uncertainty.

The RICS survey, conducted between February 23 and March 9, captured the early impact of those developments on the housing market. Surveyors reported a sharp drop in new buyer enquiries, which fell to a net balance of -26 in February from -15 in January. That marked the lowest level since December and suggests prospective buyers have become more cautious.

According to RICS head of market research and analytics Tarrant Parsons, the worsening geopolitical backdrop has dented confidence among buyers. Rising oil and energy prices have also raised the possibility that mortgage rates could remain higher for longer, adding further pressure to affordability in the housing market.

Forward-looking indicators also softened. Near-term sales expectations slipped to a net balance of -2, the weakest reading since November, pointing to subdued transaction activity in the coming months.

Expectations for house prices over the near term deteriorated sharply as well, with the net balance dropping to -18 from -6 previously. The shift suggests surveyors anticipate continued downward pressure on property values if borrowing costs remain elevated.

Rental market dynamics showed little change during the period. Tenant demand remained broadly stable over the three months to February, while the supply of rental properties continued to be constrained. New landlord instructions remained deeply negative, indicating a persistent shortage of rental stock.

The survey highlights the sensitivity of the UK housing market to interest rate expectations and economic uncertainty. With borrowing costs still elevated and geopolitical risks feeding into energy prices, analysts say the housing sector could face further headwinds in the months ahead.