The demand for new homes in Wales increased at the fastest rate since 2021.

This was revealed by the latest Royal Institution of Chartered Surveyors (RICS) residential market survey.

A net balance of 50 per cent of Welsh respondents reported a rise in new buyer enquiries in August, the highest since May 2021.

The survey also indicated an increase in supply, with 57 per cent of respondents noting a rise in new instructions to sell, up from 30 per cent in July.

This rise in demand and supply resulted in an increase in newly agreed sales, with 30 per cent of Welsh surveyors reporting an uptick in August.

This was the second-highest balance across all UK regions, following Northern Ireland.

Welsh surveyors remain optimistic about the sales outlook, with 12 per cent of respondents expecting sales to rise over the next three months.

However, the survey also reported a fall in house prices over the last three months, with 30 per cent of Welsh respondents indicating a decrease.

This is below the UK average, which was reported to have fallen flat.

The outlook for house prices remains cautious, with 22 per cent of Welsh surveyors anticipating a further decrease over the next three months.

In the lettings market, demand continued to rise in August, with 50 per cent of Welsh surveyors reporting an increase in tenant demand.

However, supply continued to fall, albeit at a lesser rate than previously seen.

17 per cent of respondents noted a fall in rental supply, up from 33 per cent in July.

A net balance of 17 per cent of respondents expect rents to rise over the next three months.

Anthony Filice, of Kelvin Francis Ltd in Cardiff, said: "Appraisals and instructions are still strong.

"Viewers, although less in numbers, are serious, supported by more favourable mortgage rates."

Melfyn Williams, of Williams & Goodwin The Property People Ltd in Anglesey, said: "The property market is active, though not as hot as before.

"Buyers are cautious but still purchasing, and sellers are concerned but still selling."