Reeds Rains MD Nigel Favas Comments On Latest Welsh House Price Index
The May 2012 Welsh House Price Index from LSL Property Services/Academetrics has been released today, providing a measure of the average house price in Wales for May 2012.
- Welsh house prices rise £3,500 as market soldiers on
- Prices up 2.4% on last year
- Two-tier housing market emerges, with prices supported by activity from wealthier buyers
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 24th July 2012.
“Given how difficult it is to get a mortgage at the moment, an annual rise in prices of 2.4% is a real victory for the housing market. Lower house prices in Wales have made it comparatively easier for first time buyers to get on the housing ladder than in England.
“Predominantly, though, it is wealthier buyers and equity-rich retirees who are sustaining sales-levels, which has helped nudge up prices. It’s created a two tier market where prices tend to vary regionally depending on the number of wealthier buyers. Prices have held up well, and even seen significant increases, in areas with plenty of wealthier buyers, but have fallen in areas with more first time buyers. The main stumbling block to a fluid housing market is a chronic lack of mortgage finance. It is marooning first time buyers in the rental market, which keeps sales levels suppressed and stops house prices growing.
“To put things in perspective, sales levels are still only half what they were in 2006. Lending criteria are becoming tighter, with banks more concerned about protecting their balance sheets, and they are reducing lending to buyers with small deposits, which will hit first time buyers disproportionately hard. The best the market can hope for over the next few months is to stagger on. On average, banks require deposits to be twice as large as they were before the 2008 financial crisis. Wales is also more exposed to public sector austerity than the UK as a whole. Houses prices at a local level will be closely tied to the performance of their immediate economies. With unemployment set to rise further, house price growth could prove elusive.”