Nigel Favas, Managing Director of Reeds Rains estate agents, who has branches in Wales comments: “The negative effects of an anaemic mortgage market caused house prices to fall for a fourth consecutive month in August. Despite this, there is reason to believe the housing market is beginning to take some small steps to recovery. The market is certainly stronger than last year – prices climbed on an annual basis during most months, albeit this climb was followed by a small fall in August. The upside of lower prices is it becomes easier for first time buyers to get a foot on the ladder.
“Although mortgage finance is scarce, and the Welsh economy is weaker than its English counterpart, some solace can be found in the rising number of sales in Wales which have climbed 12% compared to July. Admittedly this reflects as much the weakness of July as it does an improvement in the market.
“Prices vary tremendously on a regional basis. Property prices in affluent areas such as the Vale of Glamorgan are increasing because they are home to a higher number of equity rich buyers who are less constrained by mortgage finance. In areas where prices are lower the reverse is true. In less prosperous parts of Wales there are fewer affluent buyers which keeps sales levels suppressed and drags down house prices. Detached properties are proving to be more popular than other types, such as flats, which are falling sharply in sales. The latter are usually bought by first time buyers, but the lack of mortgage finance for new buyers means fewer are being snapped up.
“The government’s Funding for Lending scheme will begin to flood the mortgage market with cheaper funds, which could help more first time buyers get a mortgage. However, lenders may choose to use the funds to increase lending to lower LTV borrowers, rather than to those with only small deposits.”
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