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Property prices in Wales increase for sixth month in a row

Prices have now gone up by 0.7% year on year and it is the only region in England and Wales where house prices have risen so consistently.

The average house price in Wales is now £154,206, according to the index which is the only house price index for Wales and is based on the actual prices of properties sold.

‘Wales is the only region in England and Wales where house prices have risen for six consecutive months. Even London can’t boast such consistent growth. What’s more, it’s also the only region outside of London where prices are higher than this time last year,’ said Nigel Favas, managing director of Reeds Rains, an estate agent owned by LSL Property Services.

But beneath the healthy headline figures parts of the market are not fairing so well. Wealthier buyers, cash rich investors and retirees are buying up property, which is pushing up prices, according to LSL.

‘They wield bigger deposits and hold more equity so, when needed, can access the cheap mortgage rates that are on offer,’ said Favas.

He points out that this means that first time buyers are stuck if they don’t have the cash or the equity to secure a mortgage. ‘Paltry savings rates make building a deposit a Herculean task for first time buyers. On top of that, banks are now demanding big deposits for affordable mortgages. Weak economic growth is limiting the amount they are willing to lend, particularly to lower income borrowers and first time buyers – who they perceive as higher risk,’ he explained.

‘As a result, wealthier buyers and retirees represent a disproportionate share of the market. This is reflected in the disparity between the high prices for detached and semi detached property, typically bought by wealthier buyers, and the low prices for flats, which are archetypal first time buyers’ stock,’ he added.

This imbalance is expected to become more pronounced in 2012, with Welsh economic conditions weaker than the national average. Lending is not expected to improve for first time buyers.