House prices in Wales hit new record high in May – but market shows signs of cooling

The average house price in Wales hit a record high last month, but the market is showing signs of cooling, according to an index.

In Wales, house prices jumped by 13.7% annually, pushing the average house price here to a record £216,120.

Wales, which had previously seen the biggest house price inflation, has now fallen to third place behind Northern Ireland and the South West of England.

Northern Ireland topped the table, seeing prices rise by 15.2%, equating to an average of £185,386

Russell Galley, Halifax managing director, said that an imbalance between supply and demand for properties remained the primary reason behind the house price growth.

“For house hunters, the extent of the impact of property price inflation continues to be linked to the type of home they are looking to buy,” he said.

“Compared to May last year, you’d need around £10,000 more to buy a flat, but an additional £50,000 for a detached home.

“This clearly creates a knock-on effect for those looking to make their first home move, as the rungs on the housing ladder have become increasingly wider.

“However, the housing market has begun to show signs of cooling.

“Mortgage activity has started to come down and, coupled with the inflationary pressures currently exerted on household budgets, it’s likely activity will start to slow.

“So, there is perhaps one green shoot for prospective purchasers – with overall buying demand down compared to last year, we may be past the peak sellers’ market.”

‘Appetite’

Across the UK, the typical property value increased by £2,857 month on month in May, Halifax said.

Here are average house prices in May and the annual increase, according to Halifax:

– East Midlands, £239,859, 12.3%

– Eastern England, £337,216, 11.6%

– London, £541,942, 6.3%

– North East, £166,449, 10.6%

– North West, £219,849, 10.6%

– Northern Ireland, £185,386, 15.2%

– Scotland, £198,288, 8.3%

– South East, £391,845, 11.4%

– South West, £305,173, 14.5%

– Wales, £216,120, 13.7%

– West Midlands, £244,071, 10.6%

– Yorkshire and Humber, £200,469, 9.5%

Alice Haine, personal finance analyst at investment platform Bestinvest, said: “The latest data from the Halifax House Price Index adds to the mounting evidence that house price growth is being impacted by the uncertainty facing the wider economy.

“With rising house prices, lower disposable incomes and fewer people with the right debt-to-income ratio to qualify for a mortgage, some first-time buyers may delay their entry into the housing market, while existing homeowners may stick with their current home, focusing on a remodel or extension instead.”

Tomer Aboody, director of property lender MT Finance, said: “With prices rising by 74% in the past decade, it shows just how much the market is running away from first-time buyers.”

Nicky Stevenson, managing director at estate agent group Fine & Country said: “In this uncertain economic climate, there is a sense that the housing market is at a crossroads, with future gains unlikely to match the huge spikes recorded over the last 12 months.

“While there remains a strong appetite among existing homeowners to trade up, the supply crunch which has driven record growth in the recent past is slowly starting to ease.

“As the imbalance between supply and demand continues to narrow, annual gains are expected to soften further in the months ahead.”

Martin Beck, chief economic adviser to the EY ITEM Club said: “The prospect of households seeing a fall in real incomes this year, as high inflation bites, means fewer people will be able to afford to borrow the necessary amount they need to buy at higher mortgage rates.”

Jason Tebb, chief executive officer of property search website OnTheMarket.com said: “Despite considerable headwinds, a remarkable level of buyer and seller confidence remains in the market.”