The property landscape in Wales is experiencing a mix of trends. Despite a surge in new property listings, both sales and prices are undergoing a downturn, according to RICS. The dynamics of the Welsh property market have been anything but predictable, and for potential investors or sellers, understanding these trends is crucial.
A Surge in New Listings
September witnessed a noteworthy uptick in the number of properties being listed for sale in Wales. The latest residential market survey from the Royal Institution of Chartered Surveyors (RICS) highlighted that there was a net balance of 11% of Welsh surveyors witnessing an increase in new instructions to sell. This is a significant jump, considering the figures were at -45% in August and -12% in July.
It’s essential to understand what “net balance” means in this context. It’s determined by subtracting the percentage of survey respondents seeing a decrease from those seeing an increase. A positive net balance means more respondents have observed increases, while a negative one indicates more prevalent decreases.
Declining Buyer Interest and Sales
Despite more houses coming onto the market, buyer interest doesn’t seem to be keeping pace. Interest among potential buyers continued to wane, though at a slower rate than before. The survey showed a net balance of -36% of property professionals in Wales noting a decline, an improvement relative to -65% in August and -43% in July.
This declining trend isn’t just limited to buyer enquiries. Actual sales are also suffering. A net balance of -48% of surveyors reported a drop in newly-agreed sales through August, indicating a challenging environment for sellers hoping to close deals.
House Prices Take a Hit
The pricing side of the market reflects the struggles in sales, with house prices witnessing a downward trajectory over the last three months. A staggering net balance of -63% of Welsh respondents observed that prices had fallen, the lowest in over a decade. However, this figure still fares slightly better than the UK average, which stood at -69%.
Looking forward, there’s a pervasive sense of caution, with a net balance of -57% of Welsh property professionals expecting house prices to continue on their downward trend over the next quarter, though this is an improvement from the previous -75%.
A Glimmer of Optimism Amidst Uncertainty
All isn’t doom and gloom, though. Surveyors are showing signs of optimism about the future, particularly concerning sales over the next three months. The net balance of respondents anticipating a decrease in sales improved to -13%, up from -41% and -33% in the most recent surveys.
Rental Market Dynamics
Interestingly, while the sales market is experiencing turbulence, the rental segment seems to be on an upswing. A significant positive net balance of 43% of survey participants noticed a hike in tenant demand in September. However, this surge in demand isn’t being met with an adequate supply of rental listings, which remains scarce with a net balance of -43%.
This imbalance between supply and demand is expected to push rents higher, with a net balance of 71% of respondents predicting rises in the coming three months.
Expert Insights
Paul Lucas FRICS of R.K.Lucas & Son in Haverfordwest pointed out, “The sales market continues to slow. Buyers are hesitant to commit in the current economic climate of uncertainty.” However, Sam Burston of David James in Monmouth observes, “Market conditions are surprisingly resilient. Sellers who are flexible and responsive to market conditions tend to be successful, whereas inflexible sellers end up making more significant price cuts.”
In the rental sphere, Anthony Filice FRICS of Kelvin Francis in Cardiff notes, “Fewer rental properties are available due to landlords exiting the market, leading to increased rents. Demand is high, and properties are renting for top dollar.”
The Bigger Picture
Commenting on the broader UK market, Tarrant Parsons, a senior economist at RICS, remarked, “Given the stretched mortgage affordability, subdued buyer activity is unsurprising. Even though there was a brief pause in monetary policy tightening, interest rates are expected to remain stable for some time, offering little change in current trends. However, the longer-term outlook seems slightly more positive, with twelve-month sales expectations now less negative.”
Navigating the Current Market
For potential investors, first-time buyers, or those looking to sell, these trends highlight the importance of understanding market dynamics and being adaptable. The current scenario underscores the necessity for realistic pricing and possibly expecting extended timelines for sales. On the flip side, for those looking into the rental market, it’s a realm of opportunity, with rising demand indicating a robust environment for landlords, though potential tenants may find themselves facing higher rents.