Welsh surveyors expect weaker house sales as supply and demand both fall

RICS Residential Market Survey Wales, July 2023 

The number of potential homebuyers and properties coming onto the market in Wales both fell according to the July Royal Institution of Chartered Surveyors (RICS) Residential Market Survey and surveyors expect home sales to decrease as a result.

A net balance of -10% of Welsh respondents said that instructions to sell fell in the month of July, down from 15% in June. This is the first time this year that this figure has been in negative territory.

There was also a fall in new buyer enquiries with a net balance of -41% of respondents reporting a decline, down from -30% in June.

With demand and supply remaining acute, this has subsequently had an impact on current and projected sales. A net balance of -45% of respondents reported a fall through July compared to -32% the month previous.

Looking forward, respondents are not optimistic about the three-month sales outlook. A net balance of -31% of respondents anticipate a fall in sales, down from -10% in June. Although the balance remains negative, surveyors in Wales are slightly less pessimistic about the sales outlook than their UK counterparts.

Regarding values, a net balance of -37% of respondents was reported for prices in the July survey which is above the UK average of -53%. However, Welsh respondents’ expectations are for prices to reduce further over the next three months, with a net balance of -56% of surveyors in Wales anticipating a fall over the next quarter.

Anthony Filice FRICS of Kelvin Francis Ltd. in Cardiff commented: “We are seeing slowing activity on the part of buyers, which is partially seasonal. Buyers are conscious of mortgage rates, but largely not put off. A steady flow of properties has been coming on, but some vendors are slow to adapt to changing market, and are still expecting too much. This is preventing more sales taking place.”

David James FRICS of James Dean in Brecon added: “The market has softened, particularly the top end.”

Commenting on the UK picture, RICS Chief Economist, Simon Rubinsohn, said:

“The recent uptick in mortgage activity looks likely to be reversed over the coming months if the feedback to the latest RICS Residential Survey is anything to go by. The continued weak reading for the new buyer enquiries metric is indicative of the challenges facing prospective purchasers against a backdrop of economic uncertainty, rising interest rates and a tougher credit environment.

“Just as concerning are the insights being provided around the lettings markets. Demand shows no signs of letting up, supply remains constrained and that means rents are likely to continue rising sharply despite the cost-of-living crisis.”