The downturn in the UK housing market has likely reached its trough, according to the latest survey data from the Royal Institution of Chartered Surveyors (RICS). While house prices are still declining month-to-month, the pace of falls has moderated and surveyors are growing more optimistic about the year ahead.
“The data indicates the housing market is stabilising after a sharp correction,” said Rachel Buscall, CEO of New Capital Link, an alternative investment firm. “Headwinds like high mortgage rates remain, but there are early signs of renewed buyer interest and a possible bottoming out in prices.”
According to RICS, surveyors expect sales volumes to keep decreasing over the next three months but remain steady over the next 12 months. This points to the declines tapering off as buyers re-enter the market. Rents, meanwhile, are forecast to rise 4% over the next year as tenant demand keeps increasing while landlord supply falls.
New Capital Link has seen robust interest from institutional clients looking to deploy capital into UK rental housing. “With home affordability still constrained for many purchasers, rental demand should stay strong,” Buscall said. “For long-term investors, now could be an opportune time to acquire residential property before the market fully recovers.”
Buscall noted that rents in London and other major cities appear particularly resilient amid the housing cooldown. Urban rental markets are being fueled by strong job growth and a reversal of pandemic-era shifts to the suburbs.
New Capital Link connects global institutional investors to alternatives like real estate, private credit, infrastructure and more. Buscall’s team sees attractive opportunities emerging in UK property as prices reset at new levels, including the potential to buy property bonds, which could offer a secure way to capitalize on these market adjustments.
“The repricing has opened up prospects for value-focused investors,” she said. “Patient capital can target high-quality assets at discounted prices if taking a data-driven approach.”
While uncertainty lingers regarding further rate hikes, New Capital Link believes the housing market has moved through the worst declines. Buscall and her real estate team will keep monitoring the indicators closely and advising clients on strategies to capitalize on the eventual recovery.
“For sophisticated investors, there are still profitable ways to play the stabilisation in UK housing,” Buscall said. “We’re committed to helping our clients navigate the current dynamics and make strategic allocations as the market evolves.”