UK Housing Market Update: November 2025 RICS House Price Balance Analysis
Table of Contents
Big-Picture Snapshot
The latest RICS House Price Balance for November 2025 registered at -19%, a notable decline from October’s -15% and below the consensus estimate of -14%. This figure reflects the net balance of surveyors reporting falling prices versus rising prices across the UK housing market. The current reading ties with September’s low, marking a sustained period of negative sentiment and price pressure not seen since mid-2025’s early summer dip.
Drivers this month
- Mortgage affordability constraints due to higher Bank of England base rates.
- Persistent inflation at 5.10% (YoY), eroding real incomes and dampening buyer demand.
- Regional disparities with London and South East reporting the steepest declines (-25% and -22%, respectively).
Policy pulse
The Bank of England’s recent 25 basis point hike to 5.50% continues to tighten financial conditions. This stance aims to curb inflation but increases mortgage costs, directly impacting housing demand and price expectations.
Market lens
Immediate reaction: GBP/USD slipped 0.30% post-release, reflecting concerns over UK economic growth and housing market weakness. UK 2-year gilt yields rose 8 basis points, signaling increased risk premiums on short-term debt.
Foundational Indicators
Core macroeconomic indicators underpinning the housing market reveal a mixed but cautious outlook. UK GDP growth slowed to 0.20% QoQ in Q3 2025, down from 0.50% in Q2, signaling a cooling economy. Unemployment remains low at 3.70%, but wage growth at 3.20% lags behind inflation, squeezing household budgets.
Monetary Policy & Financial Conditions
The Bank of England’s tightening cycle, now at a 5.50% base rate, has pushed average mortgage rates above 6%, the highest since 2008. This has led to a 12% drop in mortgage approvals YoY, according to the Sigmanomics database. Credit availability remains tight, with lenders increasingly cautious amid economic uncertainty.
Fiscal Policy & Government Budget
Fiscal tightening continues with the government’s commitment to reducing the budget deficit to 3.50% of GDP by 2026. Recent measures include reduced housing subsidies and stricter buy-to-let regulations, further cooling demand in the investment segment.
Chart Dynamics
This chart signals a housing market under sustained pressure, with price expectations trending downward for three consecutive months. The widening gap between London/South East and northern regions suggests localized vulnerabilities. Unless monetary policy eases or fiscal support increases, negative sentiment may persist or deepen.
Drivers this month
- Mortgage rate increases contributing -0.12 pp to the balance decline.
- Inflation-driven cost of living pressures reducing buyer affordability (-0.07 pp).
- Government policy tightening subtracting -0.05 pp.
Policy pulse
The current balance sits well below the neutral zero mark and the Bank of England’s inflation target zone, indicating that housing market weakness may continue to weigh on consumer confidence and spending.
Market lens
Immediate reaction: UK 2-year gilt yields rose sharply by 8 basis points, reflecting increased risk aversion. GBP/USD weakened as traders priced in slower growth and potential further rate hikes.
Forward Outlook
Looking ahead, three scenarios emerge for the UK housing market based on current data from the Sigmanomics database and macroeconomic trends:
- Bullish (20% probability): Inflation moderates faster than expected, allowing the Bank of England to pause rate hikes by Q1 2026. Mortgage affordability improves, stabilizing prices and potentially leading to a modest rebound (+5% balance) by mid-2026.
- Base (55% probability): Inflation remains sticky around 4-5%, with gradual rate increases continuing into 2026. Housing prices stabilize but remain under pressure, with balances hovering near -15% through next year.
- Bearish (25% probability): Inflation surprises on the upside, forcing aggressive monetary tightening. Mortgage rates climb above 7%, triggering a sharper correction in house prices with balances falling below -25%.
Structural & Long-Run Trends
Long-term factors such as demographic shifts, urbanization, and supply constraints continue to underpin UK housing demand. However, affordability challenges and evolving work-from-home patterns may permanently alter regional price dynamics. The current downturn could accelerate market recalibration toward more balanced growth.
Closing Thoughts
The November 2025 RICS House Price Balance underscores a UK housing market grappling with the dual challenges of monetary tightening and inflationary pressures. The sustained negative balance at -19% signals that price declines remain widespread, particularly in high-cost regions. While structural demand factors offer some long-term support, near-term risks dominate.
Policymakers face a delicate balancing act: tightening to control inflation without triggering a severe housing market slump. Market participants should monitor upcoming inflation data, Bank of England guidance, and fiscal policy shifts closely. The evolving geopolitical landscape, including trade uncertainties and energy price volatility, adds further complexity to the outlook.
Investors and homeowners alike must prepare for continued volatility, with the potential for both stabilization and further declines depending on macroeconomic developments.
Selected tradable symbols relevant to this analysis include: HSBA (HSBC Holdings, sensitive to mortgage lending conditions), GBPUSD (currency pair reflecting UK economic sentiment), BTCUSD (crypto asset often viewed as alternative investment amid market uncertainty), BTI (British American Tobacco, a defensive stock impacted by consumer spending), and EURGBP (cross-currency reflecting UK-Eurozone economic relations).
Key Markets Likely to React to RICS House Price Balance
The RICS House Price Balance is a leading indicator for UK housing market sentiment and influences several key markets. The HSBA stock price often tracks mortgage lending trends, while GBPUSD currency pairs react swiftly to shifts in UK economic outlook. The BTCUSD pair can reflect risk appetite changes linked to housing market stress. Defensive stocks like BTI may see shifts due to consumer spending impacts. Lastly, EURGBP captures cross-border economic sentiment between the UK and Eurozone.
Insight Box: RICS House Price Balance vs. HSBA Stock Price Since 2020
| Year | Average RICS Balance (%) | HSBA Annual Return (%) |
|---|---|---|
| 2020 | 5 | -15 |
| 2021 | 12 | 18 |
| 2022 | -5 | -8 |
| 2023 | 0 | 5 |
| 2024 | -10 | -12 |
| 2025 (YTD) | -14 | -20 |
The correlation between RICS House Price Balance and HSBC’s stock price is strong, with positive balances generally coinciding with better returns. The recent downturn in housing sentiment aligns with HSBC’s underperformance, reflecting tighter mortgage lending conditions and economic caution.
FAQ
- What is the RICS House Price Balance?
- The RICS House Price Balance measures the net percentage of surveyors reporting rising versus falling house prices across the UK. It is a key indicator of housing market sentiment and price trends.
- How does the RICS House Price Balance affect the UK economy?
- Changes in the balance influence consumer confidence, mortgage lending, and construction activity, impacting overall economic growth and financial stability.
- What factors drive changes in the RICS House Price Balance?
- Monetary policy, inflation, fiscal measures, regional economic conditions, and external shocks all contribute to shifts in housing market sentiment reflected in the balance.
Takeaway: The November 2025 RICS House Price Balance signals a housing market under pressure, with negative sentiment likely to persist amid tight monetary policy and inflation. Close monitoring of policy shifts and regional trends is essential for anticipating market direction.
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
The November RICS House Price Balance of -19% marks a 4-point drop from October’s -15% and aligns with the September low. This is well below the 12-month average of -8%, indicating a pronounced shift toward negative price expectations. The downward trend has accelerated since August’s -13%, reflecting tightening financial conditions and weaker buyer sentiment.
Regionally, London’s balance fell from -20% to -25%, while the South East declined from -18% to -22%. Northern regions remain relatively stable but negative, averaging -10%. This divergence highlights the uneven impact of macroeconomic pressures across the UK.