House sales increase signals gradual market recovery – despite price fall
The average price of a home in Wales dropped to about £232,400 in the third quarter of 2024 –2.9% below October 2023 figures and almost 7% below its peak of £249,000 at the end of 2022.
However, the pick-up in transactions in the third quarter has offset the slight downturn in prices, signalling a gradual market recovery.
The figures have been released from Principality Building Society’s Wales House Price Index for Q3 2024 (July-October), which demonstrates the rise and fall in house prices in each of the 22 local authorities in Wales.
This represents a slight drop of 1.7% since last quarter, when prices rose by 3.1%, driven by the majority of local authorities reporting higher prices in Q2 for the first time since 2022.
Despite the slight downward trend in prices this quarter, there were around 11,200 transactions in Wales in the third quarter of 2024, 18% more than in the second quarter and 11% up on the same period a year ago.
This increase supports the recovery in property sales which began in the second quarter of this year, following a period of steady decline. For two years, cost-of-living pressures and higher interest rates significantly reduced demand and slowed activity across most of the UK, including Wales.
A recent survey conducted by Principality Building Society revealed that almost half (48%) of member respondents say that the Bank of England base rate level has impacted their ability to save. The recent base rate reduction to 5%, and economists’ predictions that this may fall further are encouraging signs of better market conditions. This, combined with a resurgence in sales of detached, semi-detached and terraced houses, suggests affordability in Wales is on the rise.
Although the Wales House Price Index shows the majority of local authorities have reported price drops for this quarter, there are also pockets of regional increases. Merthyr Tydfil appears to have turned a corner with a 9.1% price hike since the second quarter, following an earlier period of significant annual falls, followed by Wrexham, with a 5.3% increase in prices.
Shaun Middleton, head of distribution at Principality Building Society, said: “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.
“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.”
Shaun continued: “Accounting for seasonal impacts such as the general election and time of year, the data supports a gradual market upturn, with Wales showing glimmers of steady improvement.
“The UK government’s upcoming October budget announcement is expected soon, with strong indications that housing affordability will be a key focus.
This hints at possible planning reforms, with expectations of measures to boost social and affordable housing, as well as additional support for first-time buyers, especially 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.”
