Richard Sexton, director of e.surv, part of LSL Property Services, said: “The Welsh housing market is a long way from rude health, but the fact that sales have rebounded and house prices are rising annually in spite of the ongoing recession highlights its fundamental resilience. In fact, in June, the rise in the number of sales was actually more than twice the size of the normal seasonal increase, with 20% more sales taking place than in May as buyers who stayed away in April continued to return to the market.
“First-time buyers in Wales have been benefiting from much lower prices than other parts of the UK, but the situation is far from ideal. Restrictive mortgage lending continues to be a major obstacle and the size of the deposits required by lenders is still prohibitive for thousands. As a result, equity rich home buyers and investors are still principally driving buyer activity.
“Lenders are still setting their sights on less risky borrowers, and while there are some incredibly affordable mortgage rates available, it is only a minority of borrowers with big lump sums to put down on properties that are able to take advantage. Landlords, too, have been capitalising on affordable finance and historically lower prices. Areas such as Cardiff which boast strong student markets have drawn in investors and the sale of flats has benefitted from their increased activity.
“Despite the improved picture in June, the challenges in the Welsh housing market remain widespread and deeply rooted. As with all housing markets in the UK, lending needs to return to a semblance of its former health before we see an entrenched recovery – an unlikely prospect in the foreseeable future, given the uncertain economic outlook and the slow- motion meltdown in the Eurozone.
“The more immediate performance of the housing market will be tied to the impact of ongoing public sector cuts, which could lead to even greater local disparities. As further public sector job losses hit some areas more heavily than others, shaking buyer and lender confidence, we could see an even less uniform housing market across Wales.”
