House prices in Wales have remained steady in Q2 2020 (April – June) despite the coronavirus pandemic, with the average house price now £191,880.
The figures have been released from Principality Building Society’s Wales House Price Index, which demonstrates the rise and fall in house prices in each of the 22 local authorities in Wales.
The new average house price for Wales represents a 2.2% annual rise but a quarterly drop of 0.7%, although the number of purchases is lower than normal due to lockdown measures that were in place. Transactions were down by 66% in Q2 in which the housing market was temporarily frozen.
Wales began 2020 with a record average house price of £193,299 in January. Although the lockdown started in March, where the average house price had dipped marginally to £193,257, most decisions to purchase properties in that month would have been taken before the extent of the pandemic was known. Prices would therefore have been relatively unaffected by the Covid-19 outbreak until April.
Mike Jones, Interim CEO at Principality Building Society, said: “We remain cautious about how we interpret average house price data for Q2 because sales are down by more than 60 per cent compared with the same period in 2019. The temporary increase in the Land Transaction Tax to help first time buyers in particular, is likely to stimulate the market in the short-term, along with increased levels of activity following the easing of lockdown restrictions.
“However, once the UK Government furlough schemes come to an end in October, there may well be a rise in job losses and this, in turn, is likely to have a negative impact on consumer confidence in general. If this happens, then we would expect to see lower levels of activity in the housing market across the UK, and not just Wales.”
Most property observers are anticipating that average prices in Wales will continue to rise in Q3, following the increase in the Land Transaction Tax threshold from £180,000 to £250,000, which took effect from 27 July, although the savings do not apply to those buying a second home or buy-to-let property.
Seven local authorities in Wales saw house prices rise during Q2, predominantly in the south of the country, with the Vale of Glamorgan increasing at the highest rate by 14% to an average price of £300,903. Merthyr Tydfil saw prices rise by 6.8% to £135,108, while Blaenau Gwent’s average house price rose by 4.3% to £113,970.
In west Wales, Ceredigion saw prices rise to £223,328 increasing by 6.2% over Q2. Denbighshire was the only local authority in north Wales to see prices rise during Q2, with the average house price there now £186,105 which is a 3.4% increase on the previous quarter. 15 local authorities in Wales saw house prices fall during April – June 2020.
Different property types have seen varying movements in price during Q2 2020, with terraced houses increasing in value by an average 5.7% and detached properties by 3.8%. Semi-detached properties have fallen by 2.6% and flats were down by 9.0%.
The reduction in number of sales by property type is skewed as a result of lockdown restrictions during Q2 , with terraces down 61% over the three months April to June 2020 compared to the same three months in 2019, followed by semi-detached properties down by 65%, flat sales down by 68% and finally detached properties down by 70%.