According to Principality Building Society’s Wales House Price Index, the average house price in Q4 last year was £249,000, which it said was a record high.
The dip had brought annual house price growth down to five per cent, which is around half the annual house price growth rate three months earlier.
Within Wales’ 22 local authorities, Anglesey and Gwynedd reported annual declines of 0.6 per cent and 5.5 per cent respectively. All other local authorities reported annual increases in their house prices.
The report added that four out of the 22 local authorities reported new peak prices. These were Blaenau Gwent, Newport, Vale of Glamorgan and Torfaen.
Transaction levels fell significantly following the mini Budget last year, which led to an increase in interest and mortgage rates.
It said due to this, Q1 this year was the weakest since 2020 pandemic levels with sales down 17 per cent year-on-year and 26 per cent quarterly to a figure of just over 91,000 transactions.
The drop in transactions was recorded across all property types, but detached house sales showed the biggest decline and were down 23 per cent compared to the same period last year.
The report noted that this could be due to “aftereffects of a post-pandemic rush” to buy such properties, along with cost of living pressures and affordability constraints leading to greater demand for smaller homes.
Wales housing market more ‘subdued’
Shaun Middleton (pictured), head of distribution at Principality Building Society, said housing market conditions in Wales, much like the rest of the UK, had been “more subdued than in previous quarters”.
He continued: “We are at a point in the housing market cycle where wider economic factors are weighing more heavily on, and affecting the existing underlying demand for homes. Future prices will be determined by key variables such as; the movement of interest rates, inflation, and the cost of living burden.”
“The radical shift in mortgage rates over the last year cannot be disregarded, moving from a decade at around two per cent to closer to five per cent in the space of 12 months.
“We expect rates to settle around this level for the remainder of 2023 and into 2024. We are seeing increased signs of lenders competing to attract business, rates have been edging down and lenders are looking for new ways to support borrowers who are struggling with mortgage affordability.”
Middleton added: “The picture across Wales in terms of Q1 price movements was quite varied, and we would expect this to continue. Although there have been suggestions of a major housing market correction, such gloomy views have softened in recent weeks, reflecting the slightly better-than-expected performance of the UK economy. There are some positives that the market is settling to its new level.”
