The January 2023 RICS Residential Survey results continue to highlight a muted housing market in Wales, with new buyer demand, sales, and prices all reported to be on a downward trend.
Near-term expectations suggest this picture is likely to remain in place for a while longer as the market adjusts to a higher interest rates in the UK.
The one area where there was more positivity evident was in the number of properties coming onto the market. A net balance of +25% of respondents said that instructions to sell increased in Wales during January.
However, when it comes to demand, the latest net balance for new buyer enquiries was still firmly in negative territory at -38%. This continues to signal a decline in demand, with the January return marking the tenth successive negative monthly reading for new buyer enquiries.
Unsurprisingly, agreed sales were also in decline according to Welsh respondents. A net balance of -23% was reported for newly agreed sales, the eighth month of decline in succession.
Looking at the next 12 months, the sales outlook does not appear to be quite as downcast as before, with the net balance moving to -11% compared to a weaker reading of -22% seen in December.
When it comes to house prices in Wales, the net balance of respondents is now -8%. Whilst indicating a marginal fall, this is significantly less negative than the UK average and in most other UK regions. Welsh respondents are also less pessimistic about prices on a 12-month horizon than their counterparts in most other UK regions.
Andrew Peter Gregory Assoc RICS of The Letting Station based in Cardiff said: “A lack of political and financial confidence is the biggest factor creating the negativity in property sales.”
Melfyn Williams MRICS, of Williams & Goodwin The Property People in Anglesey & Gwynedd, said: “Positive vibes increased during the month of January with new stock for sale up on the same period last year. Demand from buyers remains good for correctly priced property and the qualified, experienced agent is now demonstrating their value by achieving completions.”
Commenting on the UK picture, Simon Rubinsohn, Chief Economist at RICS, said: “Although some respondents to the January RICS survey have noted a little more interest in the housing market as the new year got underway, the overall tone of the feedback still remains subdued which is not altogether surprising given the jump in mortgage rates since the autumn. Prices, meanwhile, are now beginning to reflect the shift in balance between demand and supply. However, it is questionable how much downside to pricing there is likely to be given that recent macro forecasts from the Bank of England and others are now envisaging a less harsh economic environment this year.
“Meanwhile the rental market continues to show strong interest from tenants and limited stock available which is keeping a firm momentum to rental growth. While Build to Rent clearly has role to play in helping to fill this gap, the insights from the latest survey suggest that this is not going to sufficient, at least in the near term, to address the challenge in this market.”
