Skip to content

Home prices fall in Wales for sixth month in a row

On an annual basis prices are down 2.9%, a fall of £4,465 but house sales are doing well, up 23% in October compared with September as more first time buyers get a mortgage and take advantage of the falling prices.

Like other parts of the UK, the Welsh property market has been struggling due to a lack of mortgage finance, according to Richard Sexton, director of e.surv, part of LSL Property Services.

‘Although sales activity increased by 23% between September and October, this says as much about the subdued number of sales in September as it does an improvement in the market. It is sobering that we are currently seeing lower house prices and this is the case in 18 of the 22 local authority areas in Wales,’ he said.

But he pointed out that underneath there is a slightly more positive picture for first time buyers. ‘By and large, first time buyers have been at the prickly end of a dysfunctional mortgage market since 2008. Yet unlike other parts of the UK, Wales has seen an overall boost in activity at this end of the market, although it is from a comparatively low base,’ he explained.

‘The number of loans advanced to first time buyers rose in the third quarter by 10% and on average, first time buyers in Wales were able to use smaller deposits to secure a mortgage than in the UK overall. Welsh buyers have an extra advantage, particularly compared to their English counterparts, due to first-time buyer property in Wales being cheaper than other parts of the UK, meaning the necessary deposits that need to be set aside are smaller,’ added Sexton.

A long term recovery in house prices depends on a substantial, structural improvement in the ability of banks to lend to first time buyers. But Sexton believes that lenders need more help to actually lend. ‘Banks are in a tough place at the moment; feeling pressure to safeguard a certain level of capital that has led to strict lending criteria which in turn has stifled the lower end of the market,’ he said.

‘The Welsh government is taking steps in the right direction, with plans of new and affordable housing in Wales as part of a new strategy to encourage greater activity in the housing market. The launch of the mortgage indemnity scheme should help people to access higher loan to value mortgages from Spring next year,’ he explained, adding that the UK government’s Funding for Lending scheme is expected to have an impact in the early months of 2013 but it will take some time before its true impact can be assessed.

Prices decreased in October in 18 of the 22 local authority areas of Wales compared with 16 last month. Exceptions were Newport, showing a 2.5% rise, and Denbighshire, Rhondda and Merthyr Tydfil all with a rise of just under 1%.
 
This is a significant change from last month, when prices rose by 7.7% in Wrexham and by 3.8% in Merthyr Tydfil. ‘We are seeing more unitary authority areas showing more consistent falls, suggesting that prices in Wales may be declining more than elsewhere in the UK, with the exception of Northern Ireland,’ said Peter Williams, housing market specialist and chairman of Acadametrics.

Over the three months from August to October, there has been a 5.8% increase in property completions in Wales as a whole compared with July to September, and a 2% decline compared with the same three months in 2011. These figures concur with the RICS findings which suggest a slight improvement over the last few weeks, with some hope of further movement in the New Year.

Related