House prices have sunk by £284 from February according to the latest LSL/Acadametrics Wales House Price Index.
Prices have fallen back to December 2010 levels as lack of mortgages squashes demand.
Oliver Blake, Managing Director of Reeds Rains estate agents, who has branches in Wales comments: “The Welsh housing market is being dragged back by a lack of mortgages available to buyers with small deposits. Despite the small rise of £581 since January 2013, houses prices are lower than a year ago and have dropped by £294 in the last month. Prices just haven’t taken off, and have fallen back to their December 2010 levels – a -2.7% fall over three years.
“The crux of the problem is a lack of mortgages. Welsh first time buyers are finding it tough to secure a mortgage at a decent rate and many first-time buyers are being locked out of the market entirely so are having to stay in expensive rental accommodation. As a result house sales are low, especially at the bottom end of the market. This has stifled activity higher up the property ladder, making the whole chain sluggish. Demand is high, as people are desperate to buy and escape the expensive private rental sector, but they are thwarted by strict mortgage requirements.
“In local terms, the rate of growth in house prices is closely tied to the performance of each region’s economy. Some areas are more exposed to public sector austerity, inflation, a lack of private sector investment and unemployment which suppresses house prices. In March house prices fell in 15 of the 22 unitary authorities. Sales in the South most counties are up by over double those in the North, partly owing to the population size in different parts pointing to the North and South gap.
“The weakness of the Welsh economy means the government is right in trying to give the housing market a shot in the arm. New initiatives geared to boost the first-time market – like the Help to Buy scheme – should offset some of these chronic weaknesses. The signs for 2013 are more positive. As mortgage rates drop and the range of mortgage deals improve, there is much hope that the housing market will make some great strides towards recovery this year and we are beginning to see this occur elsewhere in the UK. Traditionally, Wales lags the rest of the UK, but if the Country holds true to previous performance, we should now begin to see the green shoots emerge from the Green Green Grass of Wales in the near future.”
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