Homebuyer enquiries in Wales fell sharply during August as wider economic challenges impacted further on market conditions, according to the RICS Residential Market Survey.
The latest results show that house prices in Wales continued to rise, albeit at a less firm rate, but enquiries, sales and new instructions all dropped, continuing a downturn in activity that has been evident in the survey’s figures for several months.
Looking at new buyer enquiries, this is the fifth consecutive month of negative readings, with a net balance of -64% of Welsh respondents recorded (down from -49% in July).
With respect to agreed sales, a net balance reading of -24% was posted in August (down from -13% in July), and sales predictions for the three months ahead also slipped further into negative territory (-38% in August compared to -24% in July). 12 months ahead, sales expectations have also now been negative for four consecutive months (a net balance of -50% in the latest survey).
In terms of supply, the continued lack of homes coming onto the market is illustrated by the new instructions indicator being in negative territory at -15%. This lack of supply has been a crucial factor in underpinning growth in house prices. A net balance of +44% of respondents in Wales reported an increase in house prices during August, down from +52% in July, but comfortably above the long run average.
Looking ahead, the survey’s indicator for price expectations over the next three months is now flat (a reading of +1% down from +9% in July). A flatter picture is also now emerging on a 12-month horizon. 12-month price expectations have eased in recent months, from a net balance reading of +78% back in April to a figure of just +5% in the latest results.
Charlotte Burles Corbett MRICS of William Parkman and Daughters based in Caerphilly, Newport and Cardiff said:
“Enquiries for property sales have slowed down towards the end of the summer months but we expect demand to increase again into autumn. Concerns with the economy and rising inflation remain a risk to the market.”
Tony Filice FRICS, of Kelvin Francis in Cardiff said:
“There is still a high level of activity. Increased numbers are listing their properties. Viewing levels are good and attractive properties still generate high interest. However, Vendors are now considering offers and there are fewer ‘Best and Final’ bids.”
Tarrant Parsons, Senior Economist commented:
“Concerns over the economic backdrop and rising interest rates continue to take their toll on market momentum, with strong activity early in the year now giving way to a more subdued picture. Moreover, given projections for the UK economy point to a potential recession emerging towards the end of 2022, respondents envisage housing sales continuing to slip in the coming months. For the time being at least, the lack of stock available on the market is still providing support to house prices, which continue to rise, even if the pace of growth has cooled over recent months”