Welsh house price divide revealed by mortgage repayment study

Nation.Cymru staff

A couple buying a typical home in Monmouthshire could take more than twice as long to repay their mortgage as equivalent buyers in Merthyr, according to a new analysis.

The study estimated repayment periods of 21.2 years in Monmouthshire and 8.4 years in Merthyr Tydfil, highlighting the gap between property prices and earnings across Wales.

Blaenau Gwent had the second-shortest estimated repayment period at 8.5 years, followed by Neath Port Talbot at 10 years and Rhondda Cynon Taf at 10.1 years.

The research, conducted by mortgage specialists Bower Home Finance, used Office for National Statistics house price and earnings data to compare local authority areas across England, Scotland and Wales.

Its calculations assume two people earning their area’s median full-time salary, buying a median-priced property with a 15% deposit and spending 30% of their combined take-home pay on repayments.

The model applies a fixed annual mortgage interest rate of 4.93%. The results are illustrative estimates rather than evidence of how long existing homeowners actually take to clear their loans.

In Merthyr Tydfil, the analysis used a median property price of £140,000 and an individual annual salary of £35,152.

Blaenau Gwent had the same median house price, alongside slightly lower earnings of £34,797.

By comparison, the median property price in Monmouthshire was £310,000 — more than twice the figure in either Valleys authority.

Cardiff also had one of Wales’s longest estimated repayment periods, at 19.5 years. The study put the capital’s median house price at £266,000 and annual earnings at almost £37,000.

First-time buyers

Separate research from Principality Building Society also highlighted the affordability divide. Purchase prices for first-time buyers were equivalent to 4.6 times household income in Monmouthshire and 4.5 times in Cardiff, compared with 3.7 times in Blaenau Gwent.

Bower’s estimated repayment periods elsewhere included 11.6 years in Carmarthenshire, 11.8 in Torfaen, 12.5 in Caerphilly and 12.6 in Swansea.

Wrexham’s estimate stood at 13 years, while Newport’s was 15.9 and Ceredigion’s 17.4.

The comparison shows how the same repayment assumptions produce different results depending on local prices and earnings.

It does not account for every household’s circumstances, including single-income buyers, changes in employment, future interest rates or the time needed to save a deposit.

The £310,000 median house price used for Monmouthshire would require a £46,500 deposit under the study’s assumptions, compared with £21,000 for a £140,000 home in Merthyr Tydfil or Blaenau Gwent.