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Housing Market Continues to Weaken in Wales with Buyer Demand Expected to Decline in 2023

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Activity in the Welsh housing market continues to weaken, with sales continuing to decline, according to the December 2022 RICS UK Residential Market Survey.

Buyer demand in Wales continued to fall for the ninth consecutive month, with the net balance coming in at -54% of respondents reporting a fall in new buyer enquiries through December, down from -34% the month previous.

Looking at supply, -16% of surveyors reported a fall in new instructions to sell, indicating there may be a fall in stock levels. This is down from 11% in November 2022.

Limited supply and limited demand may be impacting sales in Wales, with a net balance of -59% of respondents reporting a fall in sales through December. And these factors may also be weighing on the outlook of surveyors, with -23% expecting sales to fall further over the next three months.

Regarding house prices, a net balance of -6% of survey participants in Wales witnessed a fall through the final quarter of 2022. Welsh respondents on balance expect prices to continue to decline further, with a net balance of -62% of respondents expecting prices to fall at the beginning of 2023. This figure is in line with the UK average where -66% of respondents expect prices to fall. The balance of respondents in Wales also expects prices to be lower in a year’s time (a net balance of -34%).

The December survey also included a set of additional questions to respondents across the UK looking at the impact of energy efficiency ratings on buyer behaviour.

When asked if respondents are seeing greater interest from buyers in homes that are more energy efficient, around 40% of the survey sample answered yes, although this was outweighed by 60% who said they do not see this trend.

Meanwhile, 41% of respondents noted that sellers were attempting to attach a price premium on homes with a high energy efficiency rating.

By the same token, 61% of contributors stated that highly energy efficient homes were holding their value in the current market.

Anthony Filice FRICS from Kelvin Francis in Cardiff commented: “There has been a slowing down of activity, but part of this is seasonal. Many Vendors and Buyers are looking forward to the new year, when activity should increase. Mortgage interest rates have increased overall but here are still good deals and the overall confidence in property values continues.”

Melfyn Williams MRICS of Williams & Goodwin The Property People Ltd in Anglesey added:

“Property market returned to normal with typical seasonal lull. Enquires already picking up in January with positive sentiment for the year ahead, despite financial woes.”

Commenting on the UK picture, Simon Rubinsohn, Chief Economist at RICS, said:

“The latest RICS Residential Survey highlights the emerging challenges in the housing market as new buyers grapple with more costly finance terms and uncertainty over the outlook for the economy.

“This is reflected in forward looking RICS indicators around both prices and activity. However, some signs of an easing in inflation pressures more generally could provide a chink of light particularly for those looking to take their first step on the property ladder.

Meanwhile feedback around the lettings market once again demonstrates the need for some concerted thinking about how to create a thriving sector that caters for both the private and ‘affordable’ renter”.