The Welsh housing market continues to weaken, with last month bringing another decrease in buyer demand and agreed sales, alongside a slowdown in house price growth, according to the October 2022 RICS Residential Market Survey.
A net balance of -69% of Welsh respondents to the latest survey reported a fall in new buyer enquiries in September. This is the seventh month in a row in which buyer interest has dropped.
As the market loses further momentum, sales have unsurprisingly fallen again too, with the October figure meaning that the number of sales in Wales has now fallen for seven months in succession (a net balance of -36%). Looking ahead, sales expectations over the next three months also remain negative. A net balance of -26% 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 +9% 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% six months ago).
The outlook for prices has also worsened, with a net balance of -29% of Welsh respondents anticipating that prices will fall over the next three months, down from -16% in the September report.
In the lettings market, tenant demand in Wales continues to rise at a solid pace, with a net balance of +68% of survey participants noting an increase in October (part of the seasonally adjusted quarterly lettings dataset). At the same time, landlord instructions were broadly flat. Given this mismatch, rents are expected to be driven higher over the near-term, returning a net balance reading of +87.
Anthony Filice FRICS of Kelvin Francis Ltd Cardiff said:
“There are reduced levels of viewings and offers, but increased new instructions. Stability restored to the mortgage market is vital.”
David James FRICS of James Dean in Brecon said:
“A much quieter month, particularly for the top end of the market. Some purchasers having second thoughts.”
Simon Rubinsohn, Chief Economist, commented:
“The latest feedback to the RICS survey provides further evidence of buyer caution in the face of the sharp rise in mortgage costs. As a result, the volume of activity is likely to slip back over the coming months and realistic pricing is now much more important to complete a sale. The settling down in financial markets could provide some relief although it may be premature to assume this will be reflected in a reduction in lending rates anytime soon. However, the employment picture remains critical to the medium-term outlook and for the time being, that remains solid.
“As far as the lettings market is concerned, the imbalance between demand and supply still appears unusually extended leading to rent expectations in the survey remaining at elevated levels and it is difficult to see this changing anytime soon in the current environment. “
