Reeds Rains MD Nigel Favas comments on latest Welsh House Price Index
The March 2012 Wales House Price Index from LSL Property Services/Acadametrics has been released this week, providing a measure of the average house price in Wales for March 2012.
- Welsh first time buyers struggle in March as banks reduce mortgage lending
- Transactions 5% lower than normal
- Average house price falls £419 in last 12 months
- Rising inflation means house prices 3.9% lower in real terms since January 2011
Nigel Favas, Managing Director of Reeds Rains, who has branches in Wales commented as follows in the latest Welsh House Price Index Report from LSL Property Services and Acadametrics published 23rd May 2012.
"Many Welsh first time buyers are having real difficulties in securing a mortgage at an affordable rate. The majority of them are being priced out of the market and forced to stay in expensive rental accommodation that is a black hole for their personal finances, making it even harder for them to save for a deposit."
"The lack of new buyers has caused house sales to drop well below their previous levels. It has put the brakes on activity further up the property ladder and caused the whole market to congeal. House prices are falling as a result. Adjusted for inflation, house prices have fallen by almost 4% in real terms since January last year."
"The underlying demand is there. People want to buy, but cannot because mortgage requirements are becoming steadily stricter. Banks are consciously reducing their lending to lower income buyers, hitting Welsh buyers disproportionately, and will continue to do so over the coming months. The eurozone crisis has made it much more expensive for banks to fund mortgages: they are covering off these extra costs by increasing rates and reducing the number of mortgages they grant to buyers with small deposits."
"Things are unlikely to get much better over this year. House prices will be closely tied to events across the Channel. If the problems blighting the eurozone become more pronounced, banks and building societies will have to scale back their mortgage lending even further. This will reduce sales yet further and knock chunks off the average house price."
"On a local level, the fortunes of house prices are heavily dependent on the performance of t heir immediate economies and, in Wales, this will particularly be influenced by the impact of public sector austerity and the threat of unemployment."