New figures suggest that properties in Wales may be more likely to experience drastic price drops than elsewhere in the UK.
According to Zoopla, Wales is particularly vulnerable to a fall in property prices due to the high level of growth seen in the last two years. Welsh properties have seen values rise by an average of 27 percent since the pandemic.
Danny Luke, managing director of property buying company Quick Move Now, explains: “Figures suggest that Wales experienced greater property price growth than elsewhere in the UK. It is estimated that Welsh property prices have grown by an average of 12 percent over the last year, compared with UK-wide increases of around eight percent.
“The pandemic created increased demand for rural living and outdoor space, whilst offering more freedom for a larger number of employees to work remotely. This combination resulted in a new wave of home hunters heading across the border into Wales, especially towards popular coastal areas such as Mumbles and Gower. Prices rose quickly as competition for available homes increased.
“Recent mortgage interest rate rises look set to have a significant impact on demand, with estate agents reporting as much as a 50 percent decline in potential buyers in some areas. Of course, whether you consider this good news or bad will depend on your personal circumstances. Rapidly rising prices left many would-be first-time buyers priced out of the market, so a fall in property prices will be welcomed by some. For others, it’s not such a positive story. Homeowners who were hoping to move onto the next step of the property ladder are likely to find their affordability significantly reduced by rising interest rates, and those who are at the point of remortgaging are likely to be concerned about how much their repayments will increase by. It’s not just rising interest rates making remortgages more expensive, falling property prices will impact your loan-to-value ratio, which also makes your mortgage repayments more expensive.
“My personal feeling is that Welsh properties may actually be less susceptible to house price falls. Even with the 12 percent annual price growth, Welsh properties offer exceptional value for money in comparison to many areas of England. The average house price in Wales is £224,000, compared with an average house price in England of £314,000.
“Many companies have continued to offer flexible working after the pandemic. I believe this will help to maintain a level of demand for rural properties in Wales, especially those towards the top end of the market. We may be more likely to see slight drops in property prices at the bottom end, but this would be good news for those hoping to get a foot on the property ladder and, in turn, encourage mobility throughout the market.”
