Residential property sales in Wales continued to fall according to the latest Royal Institution of Chartered Surveyors (RICS) Residential Market Survey, and surveyors anticipate a further decline over the next three months.

This is in strong contrast to the lettings market though, where demand in Wales continues to be strong and surveyors expect rents to rise further.

A net balance of -31% of respondents reported a fall in newly agreed sales through October, compared to -47% in September and -39% in August.

In terms of the outlook, surveyors in Wales are less optimistic on the three-month outlook for sales than they were with a net balance of -22% of respondents anticipating a fall. This is linked to a reduction in demand during October, with new buyer enquiries deteriorating in the month, falling to the second lowest balance this year. A net balance of -61% of respondents reported a decline in new buyer enquiries in Wales, compared to -39% in September.

There was more supply coming onto the sales market through October though. A net balance of 27% of Welsh surveyors reported a rise in new instructions to sell during the month, up from 15% in September, and the second consecutive month that this figure has been in positive territory.

Looking at pricing over the past three months, surveyors in Wales are less downbeat than in the UK as a whole. A net balance of -41% of Welsh respondents reported that prices had declined. This is compared to the UK average in the October survey of -63%.

In terms of the outlook for prices, a net balance of -41% of Welsh respondents anticipate that prices will fall over the next quarter, compared to -55% and -74% in September and August respectively.

In contrast to the sales market, demand in the lettings sector remains strong in Wales according to surveyors. However new supply continues to be limited. A net balance of 39% of respondents reported a rise in tenant demand in Wales in the October survey. When looking at supply, a net balance of -16% of respondents in Wales noted a fall in new properties becoming available. With this supply and demand dynamic, a net balance of 75% of respondents in Wales expect rents to increase in the three months ahead. This is well above the overall UK figure of 53%.

Regarding the lettings market, Anthony Filice FRICS of Kelvin Francis Ltd. in Cardiff said:

“Increasing rents are encouraging landlords to stay in the market, despite punitive legislation. Tenant demand is still exceeding supply, leading to rapid lettings, at full rental figures.”

Commenting on the sales market, Melfyn N Williams MRICS of Williams and Goodwin The Property People Ltd in Anglesey & Gwynedd said:  “Most would agree that the last month has been what is normally expected at this time of year. Whilst activity is down a little on previous months this is only to be expected as some sellers are already casting one eye onto the new year market.”

William Graham FRICS of Graham & Co in Newport added:

“Sale prices more are now realistic but there is no evidence locally of any major reduction. Attractive well-presented and correctly marketed houses are selling well in a restricted market.”

Commenting on the UK picture, RICS Senior Economist, Tarrant Parsons, commented:

“Plenty of caution remains evident with respect to both buyer and seller activity across the UK housing market, albeit the latest survey feedback points to a slightly less negative picture than that reported over the previous few months.

“Although base interest rates have now been kept on hold at each of the past two MPC meetings, the Bank of England was keen to emphasise that monetary policy is set to stay at a restrictive setting for quite some time yet. As such, mortgage affordability will remain stretched over the near-term, leaving little prospect of a strong rebound in residential sales volumes, even if expectations have now moved away from cyclical lows.”