However, prices vary tremendously according to location, the LSL Property Services/Acadametrics Wales House Price Index published today (Wednesday 24 October).
The average price of a house in Wales in August was £151,004, a fall of 0.3% from July. It is the fourth month in a row during which prices have gone down, albeit at a slower rate as the fall in July was 0.6%.
For the fourth month in succession, the largest rise in prices has been in The Vale of Glamorgan, up by 9.3%, followed by Ceredigion, up 5.6%, while the biggest faller is Torfaen, down 6.1%. Some 15 of the 22 unitary authority areas in Wales saw a decline in average prices over the year, three more than in July.
The decline in sales is partially put down to the exceptionally high levels of rainfall in Wales during the period April to June of this year. Despite the rain there has been a 1% increase in the number of detached properties sold, but a drop in sales of other property types, with a decline in flat sales of 8%.
The area with the largest increase in the sale of detached properties has been Carmarthenshire, with 40 more units sold, up 21% over this last quarter compared to the previous year. Cardiff has seen the largest fall in the sale of detached properties, with 27 fewer sales, down 17%. Cardiff has also seen the largest fall in the sale of flats, with 60 fewer units being sold over the three months to the end of August, compared with last year.
The area with the largest increase in property sales over the last three months, compared to the previous year, is Conwy, up by 12%. The area with the greatest fall in sales is Bridgend at the other end of the country, down 10% over the period.
Property prices in affluent areas such as the Vale of Glamorgan are increasing because they are home to a higher number of equity rich buyers who are less constrained by mortgage finance, said Nigel Favas, managing director of Reeds Rains estate agents with branches in Wales.
In areas where prices are lower the reverse is true. In less prosperous parts of Wales there are fewer affluent buyers which keeps sales levels suppressed and drags down house prices. The index also shows that detached properties are proving to be more popular than other types, such as flats, which are falling sharply in sales. The latter are usually bought by first time buyers, but the lack of mortgage finance for new buyers means fewer are being snapped up.
‘The negative effects of an anaemic mortgage market caused house prices to fall for a fourth consecutive month in August. Despite this, there is reason to believe the housing market is beginning to take some small steps to recovery,’ explained Favas.
‘The market is certainly stronger than last year. Prices climbed on an annual basis during most months, albeit this climb was followed by a small fall in August. The upside of lower prices is it becomes easier for first time buyers to get a foot on the ladder,’ he added.
He also pointed out that although mortgage finance is scarce, and the Welsh economy is weaker than its English counterpart, some solace can be found in the rising number of sales in Wales which have climbed 12% compared to July.
‘Admittedly this reflects as much the weakness of July as it does an improvement in the market. However, the UK government’s Funding for Lending scheme will begin to flood the mortgage market with cheaper funds, which could help more first time buyers get a mortgage,’ he said, adding that lenders may choose to use the funds to increase lending to lower LTV borrowers, rather than to those with only small deposits.
In the last 12 months average price rose until October 2011, but have mainly fallen since then. The small bounces in March and April 2012 can be attributed to the ending in March of the stamp duty holiday for first time buyers.
‘The trend is a falling one, starting the year at £153,500 and ending at £152,000. The number of transactions in August returned to more normal levels for the time of year, following a subdued July, with sales over the last 12 months being 2% higher than the previous year, explained Peter Williams, housing market specialist and Chairman of Acadametrics.
