Sales activity in the Welsh housing market is expected to edge upwards over the coming months, according to the latest Royal Institution of Chartered Surveyors (RICS) Residential Market Survey, despite a fall in new buyer enquiries in February.
A net balance of 15% of surveyors in Wales expect sales to rise over the next three months, the fourth consecutive month that this balance has been on an upward trajectory. Anecdotally, the expectation that interest rates will be cut further is a factor in this thinking.
When it comes to demand though, a net balance of -57% of surveyors in Wales noted a fall in new buyer enquiries through the month of February, the lowest this balance has been since August 2023.
Supply levels were also reported to have fallen last month. A net balance of -27% of Welsh respondents noted a decline in new instructions to sell.
Unsurprisingly, with both demand and supply falling, a net balance of -23% of Welsh surveyors said that sales had fallen through February. This is the lowest this balance has been since late 2023.
On the pricing side, a net balance of 6% of survey respondents said that prices have risen over the past three months. Surveyors in Wales though remain cautious on the pricing outlook as a net balance of -29% of respondents anticipating a fall in prices over the next three months.
However, respondents are more positive on the 12-month outlook, with the net balance of surveyors in Wales expecting both prices and sales to increase over the year ahead (net balances of 72% and 57% respectively).
Regarding the lettings market, a net balance of 29% of respondents in Wales report a rise in tenant demand, whilst a net balance of 29% of surveyors reported a rise in landlord instructions. Consequentially, Welsh surveyors anticipate that rents will fall flat over the next three months.
Commenting on the sales market, Anthony Filice, FRICS of Kelvin Francis Ltd., in Cardiff said:
“There is an increased number of properties coming onto the market, giving buyers confidence to make offers and view more. Vendors who are slow realising this change, still pushing for higher prices, reductions and longer sale times follow. Lower mortgage rates and landlords selling are helping first time buyers.”
Discussing the lettings market, David James, FRICS of James Dean in Brecon noted that there is still a shortage of properties to let.
Commenting on the UK picture, Simon Rubinson, RICS Chief Economist, said:
“The UK housing market appears to be losing some momentum as the expiry of the temporary increase in stamp duty thresholds approaches. Some concerns are also being expressed by respondents about the re-emergence of inflationary pressures and the more uncertain geopolitical environment. That said, looking beyond the next few months, sales activity is seen as likely to resume an upward trend with prices also moving higher.
“A key support for the market continues to be the increased flow of existing stock becoming available, giving buyers a greater choice of options. However, leading indicators around new build remain subdued for now, highlighting the significance of the Planning and Infrastructure Bill introduced to Parliament this week.
“Meanwhile, despite a flatter trend in demand for private rental properties, the key RICS metric capturing rental expectations is still pointing to further increases demonstrating that the challenge around supply spans all tenures.”
