What factors contributed to the increase?
The average price of a home in Wales decreased to approximately £232,400 in the third quarter of 2024, marking a 2.9% decline from figures recorded in October 2023 and nearly 7% below the peak of £249,000 observed at the end of 2022. Despite this drop, a notable rise in housing transactions during the same period suggests a gradual recovery in the real estate market, according to a report from the Principality Building Society.
The society has released its Wales House Price Index for Q3 2024, which covers the period from July to October. The report shows fluctuations in house prices across all 22 local authorities in Wales. While this quarter’s figures represent a slight decrease of 1.7% from the previous quarter—where prices rose by 3.1%—the overall trend has indicated a resurgence in market activity.
Approximately 11,200 housing transactions occurred in Wales during the third quarter, reflecting an 18% increase from the previous quarter and an 11% rise compared to the same quarter last year. This upward momentum in property sales commenced in the second quarter of 2024, following a prolonged period of declining activity influenced by rising living costs and increased interest rates, which have dampened demand across the UK, including Wales.
A recent survey by the Principality Building Society revealed that nearly half (48%) of members reported the Bank of England’s base rate affecting their savings capabilities. The recent reduction of the base rate to 5%, alongside predictions of potential further decreases, presents a more favourable market landscape, the report noted. This environment, combined with a rebound in the sales of detached, semi-detached, and terraced houses, points to an increase in housing affordability in Wales.
Market outlook and future projections
Despite the general trend of price declines reported by the Wales House Price Index, certain regions have experienced price increases. Merthyr Tydfil reported a significant 9.1% price rise since the second quarter, reversing earlier substantial declines. Wrexham followed suit with a 5.3% increase.
“The third quarter of 2024 signifies a slow and steady recuperation of the housing market, despite house prices adjusting slightly down in the third quarter, following an uptick in the second,” said Shaun Middleton, head of distribution at Principality Building Society. “Across Wales, developments at local authority level are mixed, reporting no clear direction with house price trends. Nevertheless, there is a clear upward trend in sales, demonstrating that market activity is looking positive overall.”
Middleton also noted that accounting for seasonal impacts, such as the general election and time of year, the data supports a gradual market upturn, indicating that Wales is showing signs of steady improvement. He added that the government’s upcoming budget announcement is anticipated to have housing affordability as a key focus. Middleton said this suggests possible planning reforms, including measures to enhance social and affordable housing, as well as additional support for first-time buyers, particularly those struggling with large deposits.
“While house prices are still adjusting downward, sales activity is gaining momentum, suggesting that a slow but steady recovery might be on the horizon. However, the pace and nature of the recovery varies by region and property type, so potential buyers should stay informed about local conditions,” said Middleton.
Founded in 1860, Principality Building Society has a network of 53 branches and 14 agencies throughout Wales and the borders, managing assets worth £12.5 billion.
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