The housing market in Wales remained under pressure during August from elevated mortgage rates, according to the latest Royal Institution of Chartered Surveyors (RICS) Residential Market Survey.
Activity metrics remained in deeply negative territory, and there was an ongoing fall in house prices. Surveyors’ near-term expectations also point to little prospect of any turnaround in the immediate future.
Looking at pricing over the past three months, a net balance of -41% of Welsh respondents reported that prices had fallen.
A net balance of -77% of Welsh respondents anticipate that prices will fall over the next quarter, down from -58% the month previous. This figure is lower than the UK average which sits at -67%.
There was also a fall in new buyer enquiries, with a net balance of -66% of respondents reporting a decline. This is also the lowest this figure has been since 2020, and outside of lockdown restrictions, this is the most negative this balance has been since 2008.
Regarding supply, a net balance of -55% of Welsh surveyors reported a fall in new properties coming onto the market.
With demand and supply both remaining under pressure, this has subsequently had an impact on current and projected sales. A net balance of -38% of respondents reported a fall in newly agreed sales through August.
Looking forward, respondents are not optimistic about the three-month sales outlook. A net balance of -45% of respondents anticipate a fall in sales.
However, William Graham FRICS of Graham & Co in Newport, commented: “Attractive well-presented homes continue to sell at broadly the asking price.”
Anthony Filice FRICS of Kelvin Francis Ltd, in Cardiff added:
“Viewing levels have been lower being a holiday period. Sales are being agreed, but below vendor expectations, many of whom are not aware of the impact of interest rates on values. Buyers are expecting discounts and sales are agreed when parties to a chain agree to share those discounts.”
Commenting on the UK picture RICS Chief Economist, Simon Rubinsohn, said:
“The latest round of feedback from RICS members continues to point to a sluggish housing market with little sign of any relief in prospect.
“Buyer enquiries remain under pressure against a backdrop of economic uncertainty and the high cost of mortgage finance. Meanwhile, prices are continuing to slip albeit that the relatively modest fall to date needs to be seen in the context of the substantial rise recorded during the pandemic period. Critically, affordability metrics still remain stretched in many parts of the country.
“The other side of the softer demand in the sales market is the continuing strength of rental demand. The yawning gap with rental supply is clearly visible in the RICS Rent Expectations indicator which remains close to an all-time high.
“Anecdotal comments from contributors that landlords are leaving the sector suggests the challenging environment for tenants is unlikely to improve any time soon”.
