British property surveyors are more downbeat about the outlook for house sales than at any point in more than three years, as higher mortgage rates squeeze demand, according to the Royal Institution of Chartered Surveyors (RICS).

The survey's gauge of expected sales over the next 12 months fell to -17 in October, the weakest reading since July 2023. RICS' headline house price balance dropped to -36, from a downwardly revised -34 in September, a slightly bigger fall than economists polled by Reuters had forecast.

Buyer demand stays subdued

New buyer enquiries held at -24, while agreed sales fell to -24 from -18, the weakest in three months. "Home buyer demand remains subdued, and respondents are bracing for a weaker year ahead for sales given the persistent macroeconomic challenges being faced," said Tarrant Parsons, RICS head of market research.

The Bank of England raised interest rates to 4% from 3.75% last week, its first increase in three years, adding to borrowing costs for buyers. Higher rates have compressed demand across the market, the survey found.

Rents expected to keep rising

The survey also pointed to further pressure in the rental market. Expectations for rent growth over the next three months climbed to +41, from +29, the strongest reading since early 2024.

Surveyors' outlook is closely watched as a forward-looking guide to the housing market, and the October figures suggest little relief for buyers or sellers in the year ahead, even as the economy as a whole has picked up.