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Uncertainty significant impacts housing market activity in Wales

A reduction in the number of properties being made available for sale has significantly impacted activity in the housing market in Wales, according to the RICS (Royal Institution of Chartered Surveyors) Residential Market Survey.

Anecdotally, surveyors point to uncertainty around Brexit as the key factor in the reduction in ‘vendor instructions’ during September, which they say has caused a slowdown in the market in Wales as a whole.

A net balance of Welsh respondents to the survey (-16 percent) said that there were fewer properties coming onto the market last month. As a result, the number of newly agreed sales also fell, according to the net balance of respondents (-22 percent).

Overall, the picture in Wales appears better than for the UK as a whole, however. Surveyors in Wales report that average house prices are continuing to rise, albeit at a slower rate than in previous months. The net balance of respondents in Wales reporting rising prices in the September survey is +14 percent, compared to -3 percent for the UK and -36 percent in London.

Welsh surveyors also remain more optimistic about the short-term outlook than elsewhere. A net balance of +16 percent of Welsh surveyors expects prices to be higher in three-months’ time. A net balance of +13 percent expects sales activity to be higher in the same timeframe.

Both figures, whilst lower than in recent months, are significantly higher than the corresponding numbers for the UK.

Looking 12-months head, surveyors remain relatively upbeat regarding prices, with a net balance of +48 percent of Welsh respondents expecting prices to be higher in a year’s time. The net balance regarding sales activity in a year’s time is however flat.

RICS Residential Spokesperson for Wales, and Director of Kelvin Francis, Cardiff, Tony Filice FRICS, said: “After a busy August, activity in September was relatively flat. First time buyer properties and traditional three-bedroom semis are most in demand and shortest in supply. Indeed, a general shortage of listings appears to a key factor in the lower levels of activity.”

Paul Lucas FRICS of R.K.Lucas & Son in Haverfordwest said: “There is a shortage of residential dwellings available as vendors await the uncertainties of Brexit. Activity is therefore slowing significantly.”

In the lettings market, the September results show tenant demand increased, as a net balance of +13 percent of contributors in Wales cited a pick-up (non-seasonally adjusted figures), but landlord instructions remain in decline. Given the consistent imbalance between rising demand and falling supply, 38 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 +14% in the latest survey, indicating that house prices rose.
  • The price expectations balance for the next three months was 16% suggesting that respondents expect prices to rise.
  • The sales expectations balance was also in positive territory, at +13%.
  • New buyer enquiries were broadly flat in September.
  • The balance for newly agreed sales was in negative territory at -22%, but this was off the back of a very strong August.
  • The number of new properties coming onto the market also fell, according to the net balance for new instructions (_16%)
  • A net balance of +48% of survey respondents expects house prices to rise in the next 12 months.