The brakes are on in the Welsh housing market according to the Principality Building Society. Figures released this week indicate house price growth for the last quarter of 2004 is down to +3.3%.
The slowdown follows a year of accelerating growth, says the society with house prices in Wales growing faster than the UK average.
The Welsh Society’s latest quarterly house price survey (to the end of December 2004) shows that house price inflation has moderated bringing 2004 to a close with an annual increase of 23.5% - down from 31% witnessed at the end of the third quarter. However, Wales’ house prices have performed well during 2004, growing at approximately 10% higher than the average UK price inflation for the year.
Peter Griffiths, Principality chief executive, said: “Over the past few months we have certainly witnessed a steadying housing market in Wales. This is partly because of seasonal trends but it is also evidence that prices were becoming over-inflated and needed to moderate to enable recent sharp increases to fall back to a more sustainable level."
“A combination of factors has enabled the brakes to be put onto the Welsh market – the five increases in the base rate since November 2003, coupled with tax increases, rising retail prices and increasing energy costs have all made a hole in people’s pockets."
“House price growth in Wales over the past two years has been exceedingly strong and has reflected the strength of the economy and the jobs market in Wales. This has also formed the basis of a very strong year for the Society."
“The Principality is predicting a flat year for house prices in Wales in 2005. The business is planning for a year of stability in the market with the likelihood of minimal growth. On the macro level, we forecast house prices to rise around 4% in Wales over the year. However, on a micro level price growth will fluctuate between 0-6%, dependant on which area of Wales the property is located.”
Highlights of the Principality figures include:
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An all-Wales average increase in 12 months from £105,538 to £130,312 (+23.5%)
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A North Wales increase during the same period from £98,362 to £116,236 (+18.2%)
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A Mid Wales increase from £110,250 to £135,281 (+22.7%)
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A West Wales increase from £87,629 to £108,405 (+23.7%)
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A South East Wales increase from £114,263 to £139,971 (+22.5%)
Peter Griffiths also looked at the impact of moderating prices on the Welsh housing market: “In the short term, the moderation in house prices will have little impact on first time buyers. There is uncertainty about when wages will catch up with the recent house price increases, enabling first time buyers to get a foot on the ladder. In the meantime new schemes will need to emerge over the coming year to assist first time buyers to purchase a home. Demand for affordable housing is certainly there, but not at the price it’s currently commanding.”
The average cost of a home in Bangor has risen to £109,366 in the last year, up 17.2% on the previous year (£93,312), while prices in Cardiff have risen by an average of 12.9%, the smallest increase in Wales, to £161,612. In Newport, prices have risen by an average of 27.9% to £129,397, in Wrexham by 18% to £116,362 (down from an increase of 34.8% last quarter) and in Swansea by 25.8% to £128,771.
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