December saw a fall of £597 or -0.4% in the average price of a house in Wales, according to the latest Welsh House Price Index from LSL Property Services/Acadametrics.
The index notes that if the -0.4% fall in December prices is confirmed, the average price over the 12 months of 2012 will have fallen -1.3% compared with a rise in 2011 of 1.1%.
Therefore, over the past two years, the market in Wales stood still. As things stand, at a December level of £151,573, average house prices will have failed to reach even the December 2008 average of £151,966 upon which we commented last month.
Richard Sexton, director of e.surv, part of LSL Property Services, said: “December figures show the Welsh housing market has regressed back to the low point it was at last September. All of the gains made during autumn have fizzled out and prices have slumped £2,000 in twel12e months. Average house price figures show a sluggish trail, as they fall by £597 monthly and slide backwards to where they stood last September.
“In light of the small uptick in November, disappointingly the small steps of improvement have disappeared. House prices are lower than they were two years ago and are £393 below the average house price in 2008, and that doesn’t even taken inflation into account. The combination of slow economic growth, high rents and the rising cost of living are knocking confidence and putting the brakes on recovery.
“The rise in lending on a national level due to the Funding for Lending scheme has been slow to feed through into Wales as the economy is weaker than in England. First time buyers are struggling to meet the tricky mortgage requirements. Tough capital adequacy requirements will prevent a significant improvement in lending to buyers with small deposits and therefore sales figures are dwindling. Yet at the opposite end of the market equity rich borrowers are able to benefit from the good mortgage deals on offer.
“There are major discrepancies within the Welsh housing market. The regional variations are uneven: for instance, counter intuitively prices in Cardiff fell slightly by 1.7% but rose by over 2% in Swansea and Newport, while Flintshire saw a rise of 6.6%, suggesting the overall fall of -1.3% is skewed. Low transactions numbers may also be a factor in these apparent trends.
“There have been signs of a recovery but it will be laborious and will depend on how many first time buyers can access mortgage finance. It will take more than just a shot in the arm from the Funding for Lending scheme to boost mortgage availability and return the mortgage market to its previous highs, seen in 2007. On the plus side rates on first time loans are at record lows and there Is a wider range of mortgage deals showing life for first time buyers in Wales should improve in the near future.”