Passing Storm
RICS's latest Residential Market Survey, covering June 2026, carries a notably more upbeat tone than anything the industry has published in months, which, in fairness, wasn’t too difficult given the trajectory much of the commentary has been on. The institution's Head of Market Research and Analysis describes the results as offering cautious encouragement that the worst of the slowdown may be beginning to pass, with several indicators moving in a less negative direction for a second consecutive month. That's a meaningful shift in language after a genuinely difficult first half of 2026. But "less negative" and "positive" are not the same thing, and developers weighing up land purchases, drawdown timing and sales strategy on live schemes need the detail behind the headline, not the headline itself.
The numbers tell a more nuanced story than the framing suggests, with new buyer enquiries showing a net balance of -29%, up from -34% in the previous two months, the highest reading since February, but still comfortably negative. In the lettings market, tenant demand rose to +16%, its strongest reading since May 2025, while landlord instructions remain negative at -18%. Reading this literally, this is a market where things are getting worse more slowly, rather than a market that's turned a corner. That distinction matters enormously for anyone underwriting a development appraisal on the assumption of stable or improving exit values.
The other datasets published alongside the RICS survey add useful texture: Q2 figures show homebuyer demand in England dipping overall, with the proportion of properties under offer falling to 41.2%, but the regional spread behind that average is wide. East Riding of Yorkshire posted the strongest quarterly increase in buyer demand, while Dorset, Surrey and Bristol saw the sharpest drops. Even the City of London, the most expensive place to buy in the country, saw demand tick up slightly in the quarter. It appears that regional markets with better affordability headroom are proving structurally more resilient through this cycle than London and the South East, where price ceilings and stretched affordability leave far less room to absorb higher mortgage rates.
For SME developers, that's not just a macro curiosity; it’s rare you will find people who build houses having time, for instance, to be pontificating about financial markets. For these businesses, It's just the day job; it’s a direct input into site selection and appraisal assumptions. It’s asking “does this work?” and understanding that a scheme in a resilient regional market with strong underlying demand is a materially different risk proposition right now than an equivalent scheme in a market still seeing enquiries and instructions fall, even if the headline "national" RICS figures are used as the reference point for both.
The government's parallel announcement with all this, plans to end gazumping in England and Wales by making sale agreements legally binding earlier in the process, following Scotland's example, is a genuinely useful piece of homebuying reform. The stated aim is to save the average buyer £650 and reduce the chain failures that currently derail transactions after an offer has already been accepted. It's worth being clear-eyed about the timeline, though: these reforms aren't expected until 2029. At the current rate of change, that may as well be 2100 for all we can predict; however, for developers thinking about sales strategy and buyer confidence today, this is a direction-of-travel signal rather than something that changes the current transaction environment. It does, however, reinforce a theme RICS itself flagged when it welcomed the chance to work constructively with Prime Minister Andy Burnham's government on practical reform across housing. Home-buying process reform is now squarely on the political agenda in a way it wasn't twelve months ago, and developers should expect more of this kind of structural intervention over the parliament, even if the immediate market impact is limited.
Taken together, the picture for SME developers is one of tentative stabilisation rather than recovery. The prudent read is perhaps don't extrapolate the "cautious encouragement" framing into pricing assumptions. This is because a second consecutive month of a less-negative net balance is a trend worth watching, not a basis for assuming exit values firm up over the next two quarters. This is what we can see as well looking at the market ourselves: the confidence is coming back, and we can see that in the number and nature of projects we look at.
None of this changes the underlying case for disciplined, conservative appraisal; if anything, a market described even by its own trade body as only "cautiously encouraging" is a reminder that lenders and developers alike should be stress-testing exit assumptions against the weaker regional and product-type data, not the headline national trend, but it’s a step in the right direction.
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