After a tentative recovery that began in the summer following a two-year slump, the housing market may be facing new challenges, according to estate agents.

Factors such as persistent economic instability, increases in mortgage rates since the latest budget, and declining consumer and business confidence are creating “additional headwinds” as 2025 approaches.

As a result, estate agents have tempered their outlook for the upcoming year. In the recent Royal Institution of Chartered Surveyors (RICS) survey, a net 33 percent of agents indicated they expect to sell more homes in 2025 compared to 2024. While this suggests a majority remain positive, it represents the lowest level of optimism since April.

“The broader macroeconomic environment is likely to present further challenges in the future,” stated Tarrant Parsons, senior economist at RICS. He highlighted that the recent rise in mortgage interest rates could hinder market activity recovery, as seen in the less optimistic sales expectations reported this month.

Parsons also mentioned that the declining confidence among consumers and businesses might begin to impact housing market conditions in the upcoming months.

Greg Davidson, a surveyor at Graham + Sibbald in Scotland, noted that predictions for a market rebound in 2025 have become more uncertain, attributing this to rising mortgage rates.

Despite these potential challenges, RICS reported that the housing market remains resilient for now, with increases in the number of house-hunters and new listings, as well as rising house prices observed recently.

In November, for the fifth consecutive month, a slight majority of survey respondents noted an uptick in inquiries from potential buyers. Additionally, a net 17 percent indicated an increase in the number of properties available compared to October.

Nevertheless, it appears that both buyers and sellers are biding their time until the new year, with transaction levels remaining relatively stable last month. Ben Hudson, from Hudson Moody estate agents in York, commented, “Most buyers and sellers are waiting for the holiday season to pass, with expectations to proceed in the new year.”

After a downturn triggered by the mini-budget in 2022, the UK housing market had recently shown signs of recovery amid falling mortgage rates, maintaining this trend even as rates slightly increased following the October budget announcement.

Most agents reported another rise in house prices in November, marking the fourth consecutive monthly increase. RICS revealed that prices are increasing in “almost all regions of the UK,” particularly in Northern Ireland, the northwest and northeast of England, as well as London.

A net 47 percent of agents across the UK anticipate further price increases in 2025, demonstrating the persistent imbalance between supply and demand. Although many agents expect sales volumes to rise in 2025, RICS forecasts that the flow of new listings may stabilize in the coming months due to a decline in valuation requests reported in November. Typically, this scenario is expected to exert upward pressure on prices.