The second quarter of 2018 saw property sales in Wales reduce by 5% and prices fall by 4.3%. However, prices are up 1% annually, according to the latest index.
Price growth is predicted to be modest throughout 2018, with the average house price currently standing at £176,456, the Principality house price index shows.
The South East of Wales saw the highest increases over the last 12 months, with prices up 7.9% in Torfaen, 6.5% in Monmouthshire, and 5.8% in Newport.
The index suggests that the inflated figures in these regions are driven by higher demand, and it is believed that this is due to the expanding commuter belt between Cardiff and Bristol. More and more people are willing to commute across the Severn on a daily basis, as houses are currently more affordable in Wales. In Newport, the average house price is currently £190,000, whereas in Bristol it is £300,000.
April saw the introduction of the Land Transaction Tax (LTT), and this is believed to have had an impact on the number of purchases of more expensive properties, with sales down in the second quarter of 2018 when this came into effect. Total house sales are down an estimated 5% in the first half of this year, compared with the same period last year.
Meanwhile, those looking to buy homes of a lower value may have delayed until April or later, to take advantage of the exemption threshold increase, which was upped from £125,000 to £180,000 after that date.
In the first quarter of 2018, sales of homes worth 400,000 or more were up 40% compared with the same period last year, a breakdown of the data shows. However, as a whole, Wales saw just a 3% increase in sales during the same period.
Meanwhile, sales of properties worth £400,000 or more decreased by 54% year on year when comparing April 2017 and April 2018, whereas overall, the decrease was only 1%.
With the exception of terraced properties, sales of all property types have fallen. Sales of flats have declined by 18%, while detached property sales are down 9%, and semi-detached sales are down 2%.
‘The subdued housing market growth is consistent with the picture across the rest of the UK. Whilst house prices have grown modestly, the data suggests that there was an increase in higher value sales prior to the introduction of the new stamp duty in Wales, which may have driven up prices in the first quarter. This has resulted in a more marked fall in average prices quarter on quarter,’ said Tom Denman, chief financial officer at Principality Building Society.
He explained that the buy to let market also remains subdued, which is perhaps reflected by the decline of flat sales. ‘Lending to first time buyers is relatively good with opportunities to take advantage of low interest rates and government Help to Buy schemes. Next time buyers are showing more caution and this is likely a result of uncertainty around rising interest rates, Brexit and the subdued nature of the wider economy. We envisage this very modest growth to continue throughout 2018,’ he added.