Homebuyer demand in Wales increased at its strongest rate in almost three years in March according to the latest Royal Institution of Chartered Surveyors (RICS) Residential Market Survey. The rate at which sellers were listing homes for sale also rose firmly according to respondents, and as a result, sales expectations have increased.
Overall, there was an improvement in sentiment in the housing market in Wales. House prices in Wales rose for the first time since October 2022 according to the latest survey, with a net balance of 12% of surveyors in Wales reporting that house prices increased. This is compared to a UK average net balance of -4%.
Looking forward on pricing, a net balance of -7% of respondents anticipate that prices will fall over the next three months. Although this figure is in negative territory, it is compared to the -13% that was seen in February.
Demand for homes in Wales has reached the highest level since mid-2021. A net balance of 49% of surveyors in Wales noted that new buyer demand rose through March. This is the fourth consecutive month that this balance has been in positive territory.
Looking at supply, a net balance of 40% of Welsh respondents noted a rise in new instructions to sell. This is up from 32% in the previous survey.
With demand and supply rising, it is unsurprising that sales also continued to increase through March. A net balance of 18% of Welsh survey respondents reported that house sales rose, down from 29% in February and 55% in January.
Surveyors are also optimistic on the sales outlook with a net balance of 13% of surveyors anticipating that sales will rise over the next three months. On the twelve-month outlook, a net balance of 45% of surveyors in Wales expect house sales to grow.
The imbalance of demand and supply in the lettings market also continues, with a net balance of 50% of Welsh surveyors noting a rise in tenant demand, and -20% of surveyors in Wales reporting a fall in supply coming to the market. Subsequently, it is unsurprising that a net balance of 20% of surveyors anticipate rental prices to increase over the next three months.
Commenting on the sales market, Anthony Filice, FRICS of Kelvin Francis Ltd. in Cardiff said: “There has been a continued increase in valuations, instructions and sales agreed, in line with anticipated Spring market. There is more choice of properties available which if correctly priced are selling. Stable mortgage rates are encouraging activity.”
Discussing the rental market, Paul Lucas, FRICS of R.K.Lucas & Son, in Haverfordwest said: “Demand is high with limited supply. Some long-term landlords are still exiting the market.”
Commenting on the UK picture, Tarrant Parsons, Senior Economist, RICS, says: “Demand continues to recover gradually across the UK housing market, with new buyer enquiries rising for a third month in succession according to the latest survey feedback.
“With the inflation backdrop turning a little less difficult of late, this has led to expectations that the Bank of England will be able to start lowering interest rates later in the year. This should continue to support the market to a certain degree going forward.
“In keeping with this, near-term sales expectations point to an improving outlook, albeit the scope for an acceleration in activity will still be relatively limited given mortgage rates are set to remain much higher than in 2020/21”.
