The latest LSL/Acadametrics index shows that prices fell 1% in May compared with the previous month taking the average price to £150,376 and are down 1.9% year on year.
It means that prices have fallen by almost £3,000 over the past 12 months, and £1,552 in the last two months alone. It’s a sharp contrast with England and particularly London where prices are rising.
‘Buyers in Wales are struggling to get mortgage finances, which is clogging the whole property chain,’ said Richard Sexton, director of e.surv, part of LSL Property Services.
‘But things are looking up. The lending environment is slowly improving for first time buyers, who are able to access wider and cheaper a range of mortgage deals. Low interest rates are helping and more affordable options are surfacing that are helping boost activity from the bottom end of the market,’ he explained.
However, deposit requirements remain the sticking point with plenty of buyers unable to cobble together enough savings while inflation remains high and wages remain suppressed. Wealthier buyers and equity rich retirees represent the largest slice of buying power: this is sustaining sales levels, and propping up prices,’ he added.
The index also shows that on a regional level prices tend to vary prominently depending on the distribution of wealthier buyers. Prices have fallen in poorer ends of the spectrum in areas with more first time buyers. The sinking prices are bucking the normal summer trend of sales rising over the summer and sales figures are below average historically, by almost half what they were in 2006.
‘But given how difficult it is to get a mortgage at the moment, the small rise in house sales is a cause for celebration. Sales have increased by 6.2% compared to May 2012, reflecting the improvement in first time buyers flocking to the market, many of who have been supported by improved lending conditions,’ said Sexton.
He pointed out that the property market could do with a spark to boost its rate of recovery and the good news is that the Welsh government recently announced the drafting of a new Housing Bill which will focus on the quality and supply of housing, as well as homelessness and the private rented sector.
‘This bodes well for the future, while the long term effects of the Funding for Lending scheme and Help to Buy feed through into the market. Hopefully this combination will drive the Welsh property market into safe territory as the year progresses,’ added Sexton.
Comparing Wales with other regions, on an annual basis, the price fall in Wales is now greater than in any other region of England and Wales. It is followed by the North with a fall of 1.1%, the South West down 0.8%, Yorkshire and Humber down 0.5% and the East Midlands down 0.2%.
While in Scotland prices are down 1.3%. However, the biggest contrast is once more with Greater London, where the annual rate of change is growth of 7.9%.
The regional differences can be seen in a breakdown of prices. In May prices increased in seven of the 22 unitary authorities in Wales and fallen in 15 compared with 10 and 12 respectively last month.
The authority with the highest annual increase by a wide margin was the Isle of Anglesey, at 8%. A monthly price rise for this authority of 2.9% is also the second highest, after Blaenau Gwent at with 4.6%. Denbighshire saw prices increase by 3.6%, Bridgend by 2.8% and Powys by 2.6%. All the other positive changes were less than 1%.
The biggest falls on an annual basis were Ceredigion with prices down 9%, Pembrokeshire down 6.8%, Caerphilly down 6.7% and the Vale of Glamorgan down 6.5%. Other falls were smaller with Conwy down 5.7%, Monmouthshire down 4.7%, Neath Port Talbot and Swansea all down 3.5%, Newport down 3.4% and others seeing a fall of around 1%.
The figures also reveal a pronounced north/south divide. The average annual change across the 14 southernmost authorities was a fall of 2.3%, whilst that across the six northernmost areas there was an increase of 0.5%. The two central areas of Powys and Ceredigion have experienced an average annual fall of 3.2%.
‘It is hard to recognise any particular pattern in these statistics. No doubt the Welsh government’s Housing Bill initiative, already mentioned, combined with a reported increase in overall optimism in the UK as a whole, will finally have a positive effect on the housing market in the Principality,’ said Peter Williams, housing market specialist and chairman of Acadametrics.