House prices in Wales stalled in October with property professionals reporting that prices will fall over the next three months. Surveyors in Wales are less positive about house prices than they were, according to the October 2022 RICS residential market survey.
Recently, house prices have been propped up by a lack of supply on the market, with the net balance of 9% showing that this has been the case in the three months to September. However, the data is less positive than it has been with house price growth easing since April 2022 (it was a net balance of 93% six months ago).
The survey found that a net balance of -29% of property professionals in Wales anticipate house prices falling over the next three months, down from -16%. In addition to a slowdown in house price growth, surveyors also reported a further decline in buyer demand and agreed sales last month.
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A net balance of -69% of Welsh property professionals reported a fall in new buyer enquiries in September - the seventh month in a row in which buyer interest has dropped. Sales have also fallen for the seventh consecutive month (a net balance of -36%).
While sales expectations over the next three months also remain in the negative territory with a net balance of -26% of those surveyed expecting sales to fall in the three months ahead.
In the lettings market, tenant demand in Wales continues to rise at a solid pace, with a net balance of 68% of survey participants noting an increase in October.
At the same time, landlord instructions were broadly flat. Given this mismatch, rents are expected to be driven higher over the near-term, returning a net balance reading of 87.
Anthony Filice of Kelvin Francis in Cardiff said: “There are reduced levels of viewings and offers, but increased new instructions. Problems are caused by dramatic down valuations by mortgage surveyors causing breaks in chains. Stability restored to the mortgage market is vital.”
David James of James Dean in Brecon said: “A much quieter month, particularly for the top end of the market. Some purchasers having second thoughts.”
While John Caines of Payton Jewell Caines in Bridgend and Port Talbot, said: "The housing market is showing signs of slowing with downward pressure on pricing as a consequence current economic conditions."
Across the UK as a whole, a net balance of 2% of property professionals reported house prices falling rather than rising, bringing an end to the sequence of positive readings running for 28 months.
While some parts of the UK are still recording growth in house prices, professionals across all parts of the UK are now, on balance, of the opinion that house prices will fall over the year ahead.
RICS chief economist Simon Rubinsohn said: "The latest feedback to the RICS survey provides further evidence of buyer caution in the face of the sharp rise in mortgage costs. As a result, the volume of activity is likely to slip back over the coming months and realistic pricing is now much more important to complete a sale.
"The settling down in financial markets could provide some relief although it may be premature to assume this will be reflected in a reduction in lending rates anytime soon. However, the employment picture remains critical to the medium-term outlook and for the time being, that remains solid.
"As far as the lettings market is concerned, the imbalance between demand and supply still appears unusually extended leading to rent expectations in the survey remaining at elevated levels and it is difficult to see this changing anytime soon in the current environment."
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