16 October 2023

Average house price in Wales continues to fall

The average price of a home in Wales has fallen to £239,378 in the third quarter of 2023, the first time in a decade that prices have dropped year-on-year.

The figures have been released from Principality Building Society’s Wales House Price Index for Q3 2023 (July-September), which reports the rise and fall in house prices in each of the 22 local authorities in Wales.

This is the first annual decline in Wales since 2013 and comes following three consecutive quarterly falls this year. With a quarterly drop of 1.1% and an annual drop of 2.6%, the new average house price is now almost £10,000 down from its peak of just over £249,000 in the fourth quarter of 2022.

Housing market conditions remain challenging across Wales, with most local authorities reporting price falls in the latest quarter. Amid the general decline is a positive note that quarterly increases in the Vale of Glamorgan (16.8%) and Conwy (5.9%) meant those local authorities reached new record highs in the third quarter at £344,384 and £243,328 respectively. 

Shaun Middleton, Head of Distribution at Principality Building Society, said: “The downward trend in house prices has continued into the third quarter. Economic pressures over recent months, paired with higher interest rates than we’ve become used to, means that affordability remains a problem for many buyers. This has put pressure on the housing market, which remains subdued, when compared to recent years when record average prices across Wales were seen. 

“The picture across Wales shows us that more local authorities have been reporting price decreases rather than increases, translating into year-on-year falling house prices. This is a clear indication of the broad-based nature of the market’s retreat over recent months.”

Compared with a year earlier, property prices in 18 of the 22 local authorities have declined, with Denbighshire experiencing the largest annual fall of 15.9%, followed by Pembrokeshire with a drop of 11.6% and Powys, down 10.5%.

There were just below 10,000 transactions in Wales in Q3, an increase on the previous two quarters of the year, but down 20% on a year ago. The slower nature of activity primarily reflects the much higher interest rates over the past year and is being experienced in much of the rest of the UK as well.

Shaun continued: “The Bank of England’s decision to leave base rate unchanged at 5.25% in September, on the back of easing inflationary pressures, has prompted better mortgage deals in recent weeks, although affordability in Wales remains stretched and the overall benefit for consumer confidence may be limited by a growing awareness that interest rates look set to remain higher for longer. This suggests that transactions levels may continue to disappoint for some time.”

Looking at price movements by property type, the different property types are currently between 1% and 4% below their respective levels a year previous. While all property types have seen pronounced slowdowns, Principality’s report shows that semi-detached properties have shown a degree of resilience – down less than 1% on the year and only 3% below their peak in March 2023.

For more information go to: www.principality.co.uk/mortgages/house-price-index.

Published: 16/10/2023