House prices in Wales continued to edge upwards last month, according to the latest Royal Institution of Chartered Surveyors (RICS). But short-term expectations for sales have deteriorated with global economic concerns starting to weigh on sentiment.
Respondents report that house prices rose through the first quarter of the year, albeit marginally so. A net balance of 6% of Welsh surveyors report that house prices were higher over the past three months.
Welsh respondents are though cautious on the house price outlook. A net balance of -24% of surveyors expect prices to fall over the next three months.
With regard to the sales outlook, a net balance of -39% of respondents in Wales expect that sales will fall through Q2, down from 12% reported in February.
This less positive short-term outlook follows an apparent reduction in demand in March, with a net balance of -25% of respondents in Wales reporting that new buyer enquiries were lower.
Agreed sales were also lower through the month, with a net balance of -7% of respondents in Wales reporting a fall in newly agreed sales, the second consecutive month this figure has been in negative territory.
On the supply side, a net balance of 24% of Welsh surveyors reported that there was an increase in new instructions to sell.
Despite the deterioration in short-term expectations, the outlook further ahead is not as downbeat for now. Whilst the 12-month sales balance has now turned negative, a net balance of +33% of Welsh respondents still expects prices to be higher in a years’ time.
With regard to the lettings market, a net balance of -17% of respondents in Wales reported a fall in tenant demand in the March survey, and -50% of surveyors reported a fall in landlord instructions. In saying this, a net balance of 33% of Welsh surveyors expect rents to rise over the next three months.
Commenting on the sales market, Anthony Filice, FRICS of Kelvin Francis Ltd in Cardiff said: “There are increased levels of instructions and a healthy level of viewings. Sales are being regularly agreed and vendors are increasingly taking advice on accepting offers.”
On the lettings market he added: “There is a healthy choice of properties available, but with rising rents, tenants are taking time to select. The lower price level properties are letting the quickest.”
Commenting on the UK picture, RICS Chief Economist, Simon Rubinsohn, said: “The expiry of the stamp duty break was always going to lead to a pause in activity in the sales market. However, the latest results, and indeed the anecdotal remarks from respondents to the survey, suggest that the shift in sentiment has been aggravated by the slew of negative macro news flow over the past few weeks.
“Looking forward, the impact on the market will in no small part depend on how the economy is affected by the emerging trade war and the response of the Bank of England to the shifting environment. For now, it is noteworthy that the longer-term RICS expectations metrics are still relatively resilient, but they have the potential to be blown off course if the tariff headwinds intensify.”
