UK housing outlook brightens. Also, Britain climbs international FDI rankings.

Summary:

• RICS sees sales expectations turn significantly more positive

• House price balance steady, but activity remains weak

• Rate-cut expectations and fiscal clarity lift housing sentiment

• UK climbs to third in global FDI rankings, McKinsey says

• AI and clean energy dominate inflows, manufacturing lags

Britain’s housing market showed tentative signs of stabilisation in December, with surveyors turning more upbeat on the outlook for sales and prices despite ongoing weakness in current activity, according to the Royal Institution of Chartered Surveyors (RICS).

The RICS survey showed the headline house price balance holding at -14 in December, unchanged from November, though the prior month’s reading was revised slightly higher. While buyer enquiries remained in negative territory for a sixth consecutive month, near-term and 12-month sales expectations improved sharply. Expectations for sales volumes over the next three months rose to their highest level since October 2024, while optimism for the year ahead climbed to the strongest level since late 2024.

RICS attributed the improved sentiment to easing uncertainty around UK fiscal policy following Chancellor Rachel Reeves’ November budget, as well as growing confidence that borrowing costs will fall further as the Bank of England moves closer to interest-rate cuts. New vendor instructions stabilised after months of decline, though surveyors cautioned that low appraisal activity suggests any meaningful increase in housing stock will take time. Conditions in the rental market softened, with tenant demand easing and new landlord instructions remaining deeply negative.

In other news, Britain has climbed global rankings as a destination for foreign direct investment, helped by strong inflows linked to artificial intelligence and clean energy, according to consultancy McKinsey & Company.

McKinsey said the UK ranked as the world’s third-largest destination for newly announced FDI projects between 2022 and 2025, behind the United States and India, with annual inflation-adjusted inflows averaging around $85 billion. However, the firm warned that investment remains heavily concentrated in large AI and clean-energy projects, with comparatively little flowing into advanced manufacturing such as EV batteries and semiconductors, leaving Britain at risk of missing out on broader industrial investment.