Worst house price falls for 15 years reported by lender

The average price of a home in Wales fell to £234,086 at the end 2023 following continued economic and financial pressures, making this the fourth consecutive quarter that prices have fallen in that part of the UK.

The figures have been released from Principality Building Society’s Wales House Price Index for Q4 2023 , which demonstrates the rise and fall in house prices in each of the 22 local authorities in Wales. 

House prices in Wales are now down six per cent - or an average £15,000 - when compared to the same period the previous year when the peak price of £249,076 was recorded. 

Despite this being the largest year-on-year decline of Wales’ average house price since the aftermath of the Global Financial Crisis in 2009, house prices remain 25 per cent higher than five years ago and when comparing against the quarter, the fall is more modest at 2.2 per cent.

Shaun Middleton, Head of Distribution at Principality Building Society says: “The housing market in Wales has been through a difficult period and given the continued squeeze on the cost of living alongside the higher cost of mortgages- as households came off much lower fixed rates - it is little wonder that some have forecast continuing price falls in 2024, followed by a recovery in 2025. 

 “However, there are some positive signs including lower inflation and an expectation that the Bank of England rate has now peaked at 5.25 per cent and will fall during 2024. Indeed, financial markets are pricing in several rate cuts, bringing the BoE rate down to four per cent later in the year. Mortgage markets have already moved, with lenders cutting rates quite significantly as competition intensifies, and we might expect that to continue.” 

While two local authorities - Cardiff and Caerphilly - report record high prices at £308,648 and £207,904 at the end of 2023, the main trend for Q4 is a subdued market with year-on-year price falls recorded in 18 of the 22 local authorities. 

Six local authorities – Monmouthshire, Carmarthenshire, Blaenau Gwent, Torfaen, Denbighshire and Merthyr Tydfil - all experienced double digit price falls when compared to the same period the previous year, with Merthyr Tydfil reporting the largest fall of 21.2 per cent. 

There were around 9,700 transactions in Wales at the end of 2023, just a slight drop on the previous quarter but down by a fifth on a year ago. 

Although all property types have experienced weaker sales, detached properties – down 27 per cent - continue to trail significantly behind other property types. As in many other parts of the UK, the pressures facing the housing market has had an impact on demand and activity levels. 

For Wales, quarterly sales transactions have declined year-on-year through the whole of 2022 and 2023. 

When looking at price movements by property type, the different property types are currently down between one and seven per cent when compared to year-earlier levels, with flats having fallen the most from peak price in relative terms – down nearly nine per cent from June 2022. 

Middleton continues: “Consumer confidence is becoming less negative, and the same is true of surveyor respondents to the latest RICS Wales housing market survey. More instructions are coming into the market and there is a sense that activity will increase, and on the back of that, prices might stabilise. Some analysts for the overall UK market are now suggesting that while the first quarter might still see prices in negative territory, there will be a steady improvement across the year. 

“Without doubt, there will be challenges ahead, but the outlook for 2024 is more of an improving view than it was. Potentially, UK Government Budget measures might seek to stimulate market activity which would add further momentum, and of course housing will loom large in the manifestos being readied for the approaching General Election when it is called. In summary, it is an improving picture for 2024. 

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