Page last updated at 05:46 GMT, Tuesday, 14 October 2008 06:46 UK

Housing market 'holds its breath'

Estate agent signs
Surveyors reported an average of 11.5 transactions over a three-month period

The average number of home inspections by surveyors in Wales has dropped to its lowest level in more than 30 years.

The report from the Royal Institution of Chartered Surveyors (RICS) said a lack of mortgage finance continued to "stifle" access to the housing market.

But it also found surveyors were optimistic that house sales will increase over the next three months.

The director of RICS Wales, Cathy McLean, said the market continued to "hold its breath".

She said the housing market would be likely to "remain a dormant beast for some time to come" unless mortgage liquidity improved.

'Dented confidence'

The survey found there was an average of 11.5 transactions per surveyor over a three-month period, the lowest level since the survey began in 1978.

But the balance of the professionals predicting sales would rise rather than fall was positive for the first time since June 2007, with 16% more surveyors expecting sales to improve.

Ms McLean said: "The recent turmoil in the financial markets has dented confidence further but yesterday's announcement by the government that the re-capitalisation of banks will be accompanied by increased lending to home owners, raises the possibility that the lack of mortgage finance that has so damaged the housing market might be eased.

August was difficult but there's been some upturn in the market with sales and obviously we're hoping that will continue
Dafydd Hardy, estate agent

"As it stands, only those with significant finances are in a position to access the market," she said.

The report also said investors were waiting to take advantage of the weakening market.

Dafydd Hardy, a chartered surveyor and director of an estate agency in north Wales, said there appeared to be some movement by investors looking to buy land or property.

"I think that if you were to look at the overall market as far as investment is concerned, I'm still of the opinion that your money is better placed within property rather than being subjected to the volatility of the stock market," he said.

"August was difficult but there's been some upturn in the market with sales and obviously we're hoping that will continue.

"We will still have a fairly difficult winter and that once the financial markets have settled then we can perhaps look at some strengthening in the market in the spring."

'Out of synch'

Mike Rees, residential director at real estate company Atisreal in Cardiff, said he expected the market to bottom-out next year, followed by a recovery in 2010.

The company released its own autumn report into the UK housing market last month, with an economist from Cardiff Business School.

It found while some high profile new developments in Cardiff, Newport and Swansea had been shelved, demand for traditional two-storey homes remained strong, as well as demand from housing associations for social housing.

"I think basically the liquidity situation is going to improve and certainly the initiatives taken by the government have already started to have a positive effect," said Mr Rees.

"If you look at the overall trend there's been a growth of about 2.5-3% in the housing market and that trend will continue."

"The fundamentals of supply and demand are out of synch and even in the good times we were never building enough homes to match supply. There's a lot of people out there trying to find a house and can't find it and that's having a beneficial effect on the rental market."

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