House prices in Wales are continuing to rise but the cost of living crisis has seen enquiries and sales curtail, according to a new report.
The latest Royal Institution of Chartered Surveyors (RICS) survey reported demand and sales fell in the housing market in Wales during June, with expectations muted for the next few months.
The residential market survey found that net balances of new buyer enquiries were at -23 and newly agreed sales were at -5, indicating that fewer potential buyers were seen in the market during June compared to May and fewer sales were going through.
Short-term expectations for the market in Wales are also muted, with a net balance of +5 for price expectations and -16 for sales expectations.
This indicates that over the next three months those surveyed, on balance, expect prices to rise marginally and sales to edge lower.
The number of properties coming onto the market in June did increase, but the report said this was off the back of a longstanding lack of supply.
Indeed, the report said stock on agents' books in Wales is at a historically low level. As a result supply prices continued to edge upwards despite lower demand.
According to the June report, a net balance of +67% of respondents in Wales saw prices rising, with anecdotal evidence suggesting that the imbalance of supply and demand is a factor in pushing up prices.
A study by later life mortgage broker Responsible Life found that many areas of Wales had become popular with house hunters over the pandemic.
Merthyr Tydfil, Caerphilly and Wrexham were the three Welsh towns named in the study that saw house prices increase by more than 25% since the pandemic between March 2020 and April 2022.
Merthyr Tydfil saw the largest increase by 34.2%, where the average house price jumped from £109,824 in March 2020 up to £147,341 in April 2022.
Average house prices in Caerphilly rose from £137,620 to £175,694, an increase of 27.7%. While in Wrexham, there was a 25.7% increase with the average house price now at £199,555.
However, the cost of living crisis, interest rate hikes and rising borrowing costs have all led to speculation that the house market will cool.
Anthony Filice, a fellow of the RICS from Kelvin Francis estate agents, said: “The number of properties coming onto the market is increasing but they are taking longer to sell. Demand is reducing, and if sales aren’t agreed early on, it can be a long process. However, properties are still selling.”
RICS chief economist Simon Rubinsohn said: "Pricing across much of the housing market remains resilient for now with a shortage of stock continuing to be a feature highlighted by many respondents to the survey. Although buyer enquiries have predictably slipped a little of late, this needs to be placed in the context of the healthy level of demand in previous months.
He added: "A probably even more striking aspect of the latest report is the concern being voiced about the rental market. A combination of a lack of social housing development allied to more onerous changes in the private lettings market is exacerbating the imbalance between demand and supply leaving the rent expectations metric pointing to further strong growth in the midst of the worsening cost of living crisis.”
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