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Average house prices in Wales decline for second consecutive quarter

THE average house price in Wales has experienced a dip in the second quarter of 2023, falling to £242,076, marking a decrease of 1.2% compared to the previous quarter. This decline of over £3,000 since March highlights the second consecutive quarterly fall this year.

Principality Building Society’s Wales House Price Index for Q2 2023 (April-June) has released these figures, providing insights into the rise and fall of house prices across the 22 local authorities in Wales.

The latest data reveals that the annual price rise is now under 1% when compared to the same period in the previous year, representing the largest slowdown in annual house price growth witnessed in nearly a decade.

The housing market slowdown is evident across various local authorities in Wales. Principality’s House Price Index indicates that, for the second quarter in a row, more local authorities have reported quarterly price falls rather than increases. Notably, Cardiff stands as the only local authority to record a new peak price of £310,930.

During Q2, there were fewer than 8,500 transactions in Wales, showcasing a modest 5% decrease compared to the previous quarter. However, this represents a substantial 24% decline compared to the same period last year. These changes occur as interest rates rise along with the increased cost of mortgages.

Commenting on the situation, Shaun Middleton, Head of Distribution at Principality Building Society, stated, “In Spring we saw a few signs that market sentiment was recovering, after being hit badly by the turmoil following the UK Government’s Autumn mini-Budget. However, activity in Q2 has been a little weaker than in Q1, and further weakness now seems likely. This picture is repeated across Wales, with the significant majority of local authorities reporting price falls in the latest quarter, as well as year-on-year.”

While property prices in 9 of the 22 local authorities have experienced increases compared to a year earlier, Denbighshire, Gwynedd, and Powys have reported annual falls of more than 5% (6.1%, 6.1%, and 8.9% respectively).

Monmouthshire stands out as the local authority reporting both the largest quarterly and annual increases at 12.4% and 15.4% respectively, leading to a new average house price of £415,000.

When examining the average price by property type in Wales, only detached homes have maintained a slight increase year-on-year with a 0.7% rise, reaching a new average price of £360,302. Meanwhile, semi-detached homes have experienced an annual decline of 1.1% to £219,460, terraced homes have fallen by 1% to £171,546, and flats have seen a 4% decrease to £154,508 when compared to the same period last year.

Shaun continued, “Our last outlook offered up a modestly optimistic view of the future based on the market expectation that interest rates were nearing their peak. However, since then, to fight inflation, the Bank of England has continued to raise the base rate with a 0.25% rise in May and a 0.5% rise in June (so currently standing at 5%). Financial markets are now expecting further rises, continuing throughout 2023 and into 2024, perhaps peaking at 6.5%. Constant rate rises have led to mortgage product repricing, and inevitably this has been disruptive. Higher rates also impact the amount people can afford to borrow, as a result sellers have found it harder to attract buyers and some have been forced to offer discounts and lower their expectations in order to secure sales. While few are forecasting a full-scale housing market recession, it is quite clear that the market is becoming more difficult.”

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