The outlook for the housing market in Wales remains challenging amid a fall in market activity during September, according to the latest RICS UK Residential Market Survey.
A net balance of -46% of Welsh respondents to the latest survey reported a fall in new buyer enquiries in September. This is the sixth month in a row in which buyer interest has dropped.
As the market loses further momentum, sales have unsurprisingly fallen too, with the September figure meaning that the number of sales in Wales has now fallen for six months in succession (a net balance of -33%). Looking ahead, sales expectations over the next three months also remain negative. A net balance of -13% of respondents in Wales expect sales to fall in the three months ahead.
Surveyors in Wales are also less positive about house prices than they were. While house prices have been propped up by a lack of supply most recently, and the latest net balance of +29% demonstrates that this has still been the case in the three months to September, the data is notably less positive than previously and continues the trend since April 2022 of an easing in house price growth (it was a net balance of +93% five months ago).
The outlook for prices has also worsened, with a net balance of -15% of Welsh respondents anticipating that prices will fall over the next three months, down from -3% in the August report.
Paul Lucas FRICS of R.K.Lucas & Son in Haverfordwest said:
“Activity in the market is slowing down and this was noticeable before the latest UK mini budget.”
Anthony Filice FRICS of Kelvin Francis Ltd Cardiff said:
“Viewers are taking more time before making offers. Some vendor’s expectations are behind market changes and they are still expecting quick sales and higher prices. Attractive properties are still selling, but after a longer marketing period.”
Commenting on the UK picture, Simon Rubinsohn, Chief Economist, commented:
“The turmoil in mortgage markets in recent weeks has compounded the increasing level of economic uncertainty resulting from higher energy bills and the wider cost of living crisis, in shifting the dial in the housing market. Even though the headline price balance remains in positive territory for now, storm clouds are visible in the deterioration of near term expectations for both pricing and sales. Looking further out, the picture portrayed by the RICS survey has clearly shifted in a negative direction.”
“How this plays out in terms of hard data will inevitably depend in part on the state of the mortgage market once it settles down, but it is difficult not to envisage further pressure on the housing sector as the economy adjusts to higher interest rates and the tight labour market begins to reverse.
“For now mortgage arrears and possessions remain at historic lows but they are inevitably going to move upwards over the next year, as pressure on homeowners grows. However, as lenders have been a lot more cautious through this cycle with high loan to value mortgage accounting for a much smaller share of the lending book than in the past, this should help to limit the adverse impact on the market.”
