Welsh housing market conditions remain challenging, but with a range of indicators improving, respondents to the latest Royal Institution of Chartered Surveyors (RICS) Residential Market Survey suggest a prolonged downturn in sales may be bottoming out.
The newly agreed sales indicator has been in negative territory for 17 consecutive months, but respondents in Wales are now predicting that sales will rise on a three-month outlook for the first time since April 2022.
Welsh respondents are also slightly less pessimistic about prices over the three months ahead than they have been, with a net balance of -16% reported for price expectations in the May survey compared to -58% in April and -31% in March.
This may be linked to a recent uptick in supply levels. In May, a net balance of +10% of Welsh respondents said that instructions to sell rose in the month, the fifth consecutive survey in which respondents reported an increase in properties coming to the market, providing more choice for buyers.
In terms of current demand, a net balance of -31% of respondents saw a fall in new buyer enquiries in May and although demand is still reported to be in decline, it is more modest than was seen in April where the figure was -57%.
Regarding current prices, a net balance of -13% of respondents was reported for prices in the May survey which was a slight improvement on the April survey.
Surveyors in Wales are more optimistic about the outlook when compared to the UK average where -29% of respondents expect prices to fall over the next quarter.
Melfyn Williams, MRICS of Williams and Goodwin – The Property People Ltd in Llangefni said:
“The property market continues to tick over as we move into the summer period. Auctions remain popular with good success rates and prices achieved in excess of guides. The right property, in the right location, at the right price, is selling well.”
Anthony Filice, FRICS of Kelvin Francis Ltd in Cardiff added:
“Increasing numbers of properties are coming onto the market. Vendors who accept advice on values are selling, but with the market now in favour of buyers, there is more choice and some are taking longer to offer as a result.”
Commenting on the UK picture as a whole, RICS Senior Economist, Tarrant Parsons, said:
“The latest RICS UK Residential Survey feedback indicates a modest recovery in the sales market activity during May, with generally less negativity compared to the end of 2022.
“However, it seems storm clouds are gathered, with the UK’s stubbornly high inflation likely undermining the recent improvement in activity by prompting the Bank of England to take further action through interest rate rises, leading to higher mortgage rates and ultimately reducing affordability and buyer demand. The banking sector appears to expect this with many banks and building societies already introducing products with higher interest rates.
“Interest rate rises are also impacting the rental sector and combined with looming reforms proposed in the government’s Renters (Reform) Bill, landlords are increasingly deciding to leave the sector and sell up property, causing further constraints to lettings supply.”