A survey by the Royal Institute of Chartered Surveyors (RICS) has cast a very interesting light on the often forgotten Welsh property market. While much of the focus of late has been on the English and Scottish property markets, there are signs that the Welsh market is starting to recover. The recovery may be gradual but it does look as though demand is increasing and is set to continue this trend in the New Year.
Supply and demand
As we know, the economic situation surrounding the UK is shrouded in some mystery because of the Brexit situation. This will obviously take some time to unravel and depending upon which side of the fence you are sitting, it could be extremely positive or challenging for the UK. However, in the short term there has been a significant increase in demand for Welsh property.
Over the last month purchase enquiries have increased by 33% although the number of properties for sale has fallen by 25%. While the upturn in enquiries is encouraging a 25% reduction in properties for sale is challenging. The number of properties listed has now fallen for the sixth month in a row. There may be a degree of seasonality in these figures, with winter historically a quiet time for the market, so it will be interesting to see what happens in early 2017.
RICS spokesman Tony Filice is forecasting Welsh property sales to move forward in early 2017. This is on the back of the fastest increase in new buyer enquiries since July 2015. It is interesting that there is no prominent mention of the Welsh economy and how this may perform. At the moment it is simply a figures game, there is significantly more demand than the number of properties available which historically leads to price increases.
Of the surveyors who responded to the questionnaire 59% believe there will be an increase in sales in the New Year. Interestingly, 7% more of those surveyed said they had seen price falls over the last three months compared to those who have experience price rises. Looking at past data this has led RICS to conclude that this ongoing reduction in transaction numbers, which began in the spring, may be coming to an end.
Why the confusion?
As we touched on above, economic considerations such as Brexit have obviously had an impact on sentiment but many believe it is the changes to stamp duty earlier in 2016 which have caused most damage. The whole of the UK buy to let market saw a significant rush prior to the April change in stamp duty and then a lull in activity as pent-up disappeared. While there are signs that the Welsh buy to let market continues to struggle with the increase in stamp duty, an improvement in demand for property is certainly encouraging.
When you strip down the elements of any property market it boils down to a simple supply/demand ratio. While the increase in demand and the reduction in supply may be giving an “exaggerated impression” of the underlying market in the short term, it does bode well for the long-term.