The average price of a house in Wales was £150,376 in May, a decrease of £1,552 (-1.0%) since April and of £1,217 (-0.8%) since the start of the year, according to the latest house price index for Wales from LSL Property Services and Acadametrics.
Prices have now declined in each of the three last months, and in 8 of the last 12 months. On an annual basis, prices have fallen -1.9% which compares with the rise of +3.0%, just 13 months ago.
Comparing Wales with other regions, on an annual basis, the price fall in Wales is now greater than in any other region of England & Wales; it is followed by the North at -1.1%, the South-West at -0.8%, Yorks & Humber at -0.5% and East Midlands at -0.2%. The comparative rate in Scotland is -1.3%. However, the biggest contrast is once more with Greater London, where the annual rate of change is +7.9%.
Richard Sexton, director of e.surv chartered surveyors, part of LSL Property Services, said: “The Welsh housing market is still caught in the clutches of restricted mortgage availability. Prices have fallen by almost £3,000 over the past 12 months, and £1,552 in the last month. It’s a sharp contrast with England, and particularly with London, which is starting to fire on all cylinders. Buyers in Wales are struggling to get mortgage financing, which is clogging the whole property chain.
“But things are looking up. The lending environment is slowly improving for first-time buyers, who are able to access a wider and cheaper range of mortgage deals. Low interest rates are helping, and more affordable options are surfacing that are boosting activity from the bottom end of the market. But deposit requirements remain the sticking point, with plenty of buyers unable to get together enough savings, while inflation stays high and wages remain suppressed. Wealthier buyers and equity-rich retirees represent the largest slice of buying power: this is sustaining sales levels, and propping up prices.
“On a regional level, prices tend to vary prominently depending on the distribution of wealthier buyers. Prices have fallen at poorer ends of the spectrum in areas with more first-time buyers. The sinking prices are bucking the normal summer trend of rising sales over the summer – sales figures are below average historically, by almost half what they were in 2007.
“But given how difficult it is to get a mortgage at the moment, the small rise in house sales is a cause for celebration. Sales have increased by 6.2% compared to May 2012, reflecting the improvement in first-time buyers flocking to the market, many of whom have been supported by improved lending conditions.”
Sexton added: “The property market could do with a spark to boost its rate of recovery. The good news is that the Welsh Government plans to up its game, having recently announced the drafting of a new Housing Bill which will focus on the quality and supply of housing, as well as on homelessness and the private rented sector. This bodes well for the future, while the long-term effects of the Funding for Lending scheme and Help to Buy feed through into the market. Hopefully this combination will drive the Welsh property market into safe territory as the year progresses.”