House prices in Wales have experienced a significant decline, with the average price falling to £229,263 in the first quarter of 2024.
This marks the fifth consecutive quarter of falling prices, bringing the average cost nearly £20,000 below its late 2022 peak, according to the latest data from Principality Building Society’s Wales House Price Index.
The report indicates a 2.1% decrease from the last quarter and a 6.5% drop compared to the same period in the previous year. While house prices are 23% higher than five years ago, adjusted for consumer price inflation, real-term prices have reverted to early 2019 levels.
Shaun Middleton, head of distribution at Principality Building Society, commented on the trend: “The downward trend of house prices has continued for the fifth consecutive quarter in Wales. Economic pressures, coupled with the higher cost of mortgages has meant affordability continues to be a problem for many buyers, placing undoubtable pressure on the housing market in Wales.”
He added: “The picture across Wales shows that overwhelmingly local authorities have been reporting price decreases, rather than increases, translating into another year-on-year falling of house prices.”
Despite the overall downward trend, Flintshire reported a notable exception with a 12% increase. In contrast, regions like Carmarthenshire, Denbighshire, Merthyr Tydfil, Powys, and the Vale of Glamorgan saw double-digit declines, with the latter experiencing the largest drop of 15.7%.
Transaction volumes also fell, with approximately 8,400 properties changing hands in the first quarter, a 15% decrease from the previous quarter. This reflects broader economic pressures impacting the UK housing market, with Wales experiencing a continuous year-on-year decline in quarterly sales transactions since late 2021.
Despite the challenging market conditions, Middleton remains optimistic about future trends, noting improvements in inflation rates and potential for better mortgage deals: “Despite what has marked the most challenging housing market conditions since the Global Financial Crisis in 2008, the latest news that inflation continues to fall – although slower than anticipated – suggests that the housing market in Wales could soon see more positive signs. Many economic analysts have also predicted that the Bank of England base rate has peaked at 5.25 and will fall this year. This assumption is prompting better mortgage deals and easing the affordability of housing.”
He concluded: “Consumer confidence is also improving, along with wage growth, as pent-up demand for housing builds. Looking ahead, there may well be another fiscal event from the UK Government, but at the very least a General Election on the horizon, and a newly formed Welsh Government in Wales with a mandate to tackle affordable housing.
“Together with our insight, this suggests that this quarter may well represent the low point for house prices in Wales, which we expect to rise as affordability increases.”
