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Brexit and General Election slow down housing activity in Wales

Housing market activity slowed significantly in Wales last month, driven by factors including Brexit uncertainty, seasonality, and the upcoming General Election, according to the monthly RICS (Royal Institution of Chartered Surveyors) Residential Market Survey.

Fewer new sales were agreed in October compared to September, according to the net balance of respondents in Wales. Indeed, at -43%, the October net balance for newly agreed sales was at its second lowest level since 2008.

There were also a smaller number of potential buyers evident in the market, with 28% more respondents reporting falling rather than rising numbers of new buyer enquiries during October. Sellers were also fewer in number, with 23% more surveyors pointing to falling numbers of vendor instructions than reporting rising numbers.

As a result, expectations for the housing market in Wales over the next three months have deteriorated. A net balance of +4% of respondents to the survey expect prices to rise over the next three-months compared to +13% last month. A net balance of +8% of contributors expect sales activity to be higher in the same timeframe, down from +12% in September.

RICS Residential Spokesperson for Wales, and Director of Kelvin Francis, Cardiff, Tony Filice FRICS, said: “It feels like the tap has recently been turned off in the sales market in Wales. The number of buyers and sellers is not what you would expect, even at this time of year. We are seeing a minimal number of instructions and few viewings. However, older stock is selling relatively well, and first-time buyers continue to enter the market, enticed by favourable mortgage rates.”

Paul Lucas FRICS of R.K.Lucas & Son in Haverfordwest said: “Market activity has slowed down dramatically within the last month, due to a mixture of pre-winter blues and Brexit lethargy”.

In the lettings market, the October results show tenant demand decreased for the first time in over a year, as a net balance of -38 percent of contributors in Wales pointed to a fall (non-seasonally adjusted figures). With demand being lower, expectations for rents in the three months ahead softened, despite landlord instructions also remaining in decline. +13 percent of respondents expect to see rents rise higher over the next three months. 

The main findings of the latest survey for Wales were as follows (all figures indicate the net balance of respondents):

  • The headline price balance was +22% in the latest survey, indicating that house prices rose.
  • The price expectations balance for the next three months was +4% suggesting that the outlook for prices is broadly flat over the next three months.
  • The sales expectations balance was in positive territory, at +8%.
  • The new buyer enquiries net balance was -28%, pointing to lower levels of new buyer enquiries in October
  • The balance for newly agreed sales was in negative territory also at -43%, indicating a sharp drop in newly agreed sales last month
  • The number of new properties coming onto the market also fell, according to the net balance for new instructions (-23%)
  • A net balance of +61% of survey respondents expects house prices in Wales to rise over the next 12 months.