House prices in Wales are expected to fall over the next three months as economic uncertainty and the cost of living crisis sees the number enquiries and sales in the market shrink.
According to a survey from the Royal Institution of Chartered Surveyors (RICS), the outlook for house prices worsened in September, with a net balance of -15% of those surveyed in Wales anticipating prices to fall over the next three months, down -3% from August.
In recent months, house prices in Wales have been propped up by a lack of supply, with the latest net balance of +29% showing that house prices are still relatively positive.
However, the RICS said this is down from the net balance of +93% recorded five months ago showing that house price growth has slowed since April 2022.
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The survey also found that the net balance of new buyer enquiries in Wales fell in September to -46% - the sixth month in a row to record a drop in buyer interest.
Sales have also fallen as the market loses further momentum, with the number of sales in Wales falling for the sixth consecutive month at a net balance of -33%.
While sales expectations over the next three months also remain negative. A net balance of -13% of Welsh respondents expect sales to fall in the three months ahead.
Paul Lucas, a fellow of the RICS from R.K Lucas & Son in Haverfordwest, said: "Activity in the market is slowing down and this was noticeable before the latest UK mini budget."
Anthony Filice, a fellow of the RICS from Kelvin Francis estate agents in Cardiff, said: “Viewers are taking more time before making offers. Some vendor’s expectations are behind market changes and they are still expecting quick sales and higher prices. Attractive properties are still selling, but after a longer marketing period.”
RICS chief economist Simon Rubinsohn said: “The turmoil in mortgage markets in recent weeks has compounded the increasing level of economic uncertainty resulting from higher energy bills and the wider cost of living crisis, in shifting the dial in the housing market.
"Even though the headline price balance remains in positive territory for now, storm clouds are visible in the deterioration of near term expectations for both pricing and sales. Looking further out, the picture portrayed by the RICS survey has clearly shifted in a negative direction."
He added: "How this plays out in terms of hard data will inevitably depend in part on the state of the mortgage market once it settles down, but it is difficult not to envisage further pressure on the housing sector as the economy adjusts to higher interest rates and the tight labour market begins to reverse.
"For now mortgage arrears and possessions remain at historic lows but they are inevitably going to move upwards over the next year, as pressure on homeowners grows. However, as lenders have been a lot more cautious through this cycle with high loan to value mortgage accounting for a much smaller share of the lending book than in the past, this should help to limit the adverse impact on the market."
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