According to Principality Building Society’s House Price Index, the quarterly house price growth was estimated at 2.2%.
This is the strongest quarterly growth in over two years, the report said.
Principality Building Society said that in the first quarter, prices had picked up, but the average house price was below the peak of £249,000 in 2022.
Looking at different regions, around 13 local authorities reported quarterly price decreases in Q1 and nine reported a year-on-year decline.
Blaenau Gwent, Bridgend and Caerphilly reported fresh record prices in the first quarter of 6.8%, 11.8% and 6.6% respectively.
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The report noted that this showed that “market strength to date is currently centred in South Wales”.
Principality Building Society estimated that there were about 10,000 transactions in the first quarter. This is 13% lower than in the fourth quarter but a fifth up on the same period a year ago.
This suggests growing buyer confidence in spite of ongoing cost-of-living pressures, elevated mortgage rates and global economic uncertainty, the report said.
Principality Building Society said a “key driver of the year-on-year transaction growth could be the ongoing supply issues, with the last 25 years seeing a notable decline in housebuilding in Wales”.
“Significant policy changes such as the extension of the Welsh government’s Help to Buy scheme, second home tax adjustments, and plans to build more affordable housing aim to combat this challenge and curb investor activity,” it said.
‘Positive start to 2025’
Iain Mansfield, CFO at Principality Building Society, said: “The housing market in Wales has had a positive start to 2025, with prices rising quarter-on-quarter at their fastest pace in over two years.
“Despite a challenging economic backdrop, we’re seeing a year-on-year growth of transactions, spurred on by supply challenges and falling rates. Meanwhile, affordability remains a key factor shaping the market landscape.”
Mansfield continued: “Across Westminster and Wales, housing is high on the agenda. Looking ahead, the UK government remains publicly committed to extensive planning reforms – setting out an ambitious target to build 1.5 million homes over the next five years, representing a significant shift in the UK’s housing landscape.
“This, paired with the Welsh government’s Help to Buy Wales extension and additional £10m investment allocated to kick-start housing schemes across Wales, signals a clear message that policymakers recognise the importance of housing to families and individuals across the country.
“Despite external pressures such as cost of living, inflation, and global economic pressures, the housing market in Wales is moving forward in a positive direction, with increased consumer confidence and areas of strong regional performance.
“Principality Building Society is dedicated to working with housing associations and other developers to deliver sustainable housing solutions for communities across Wales as part of the solution; providing affordable, quality homes.”
