Property prices went up in all 22 local authority areas
The average house price in Wales has reached a record £245,893 as economic pressure continues to build and affect affordability in the country.
Principality Building Society’s Wales House Price Index for Q3 2022, provided by Acadata, revealed a 12.4% annual increase in average house prices, and 2.2% quarterly growth.
“It is slightly strange talking about house prices in Wales reaching new peaks when so much has happened at the end of the third quarter with the UK government minibudget and continued cost-of-living pressures,” Shaun Middleton, head of distribution at Principality Building Society, said. “With interest rates surging higher, meaning repayments on mortgages will become much more costly per month, the market faces significant challenges in the immediate future.
“Even though the Welsh government has increased the Land Transaction Tax threshold from £180,000 to £225,000 in a bid to support first-time buyers and those wishing to move homes, affordability will come under considerable pressure, which could mean that purchasing demand will reduce.”
The mutual noted that property prices went up in all 22 local authority areas when compared with the same period last year, with 16 authorities reporting double-digit annual price increases. Nine local authorities report record highs for the second quarter in a row, with several of these authorities – Blaenau Gwent, Ceredigion, Flintshire, Rhondda Cynon Taf and the Vale of Glamorgan – reporting annual price increases of more than 15%.
Despite the continuing strong pattern of annual price rises and new record highs, the quarterly comparison is more mixed, with only 13 local authorities reporting quarterly increases, several of which were less than 1%.
Read more: House prices in England and Wales – the latest.
Principality also estimated that there were as many as 12,400 transactions in Wales in Q3, 13% higher than in Q2 and 1% lower than a year ago, but on par with corresponding pre-pandemic (Q3 2019) levels. Average figures show that sales of detached homes have increased 11% annually, while semi-detached and terraced properties have increased 13% to 14% annually. In contrast, flat sales had a small 1% increase year-on-year.
“Transaction levels remained relatively strong over the third quarter, helped in part by buyers wishing to complete their house purchase with the attractive mortgage deals they had previously secured,” Middleton remarked.
“It must be remembered that higher energy costs and general rises in cost-of-living are increasing overall household expenditure which will have to be factored into mortgage lenders’ calculations when assessing borrowers’ ability to repay. This will reduce the amount lenders are able to loan to the borrower, make it even harder for first time buyers to obtain a mortgage and will also mean many people will be unable to obtain the bigger mortgage they need to move to their next home.”
Middleton added that while many are predicting a decline in house price inflation, there are “many unknowns at this stage.”
“A lot does depend on any potential government interventions, as well as, of course, on the actions of the Bank of England with regards to future rate rises,” he explained. “By the time of the fourth quarter report, there will hopefully be more clarity on what the outlook is for property prices.”
