Although this was the first quarter for a year when house price inflation was in single figures, it is still above the rate of inflation. Principality’s report shows that sales rose by 46% with more than 53,000 transactions in 2021, compared to 36,000 in 2020.
Tom Denman, Chief Financial Officer at Principality Building Society, said: “The housing market in Wales saw a 46% increase in sale activity in 2021, as prices hit a new peak, reflecting continued demand from potential buyers and a continued shortage of stock on the market. Continuing low mortgage rates and high savings accumulated during lockdown meant that some households decided it was the time to move to areas with more space as lots of people continued to work from home.
“We recognise that it is getting much harder now for younger generations in Wales to get on the property ladder, due to rising house prices, and difficulties saving for larger deposits. Most economic analysts predict rises will be moderate in 2022 as the effects of the transaction tax holiday subsides, but buying homes could become unaffordable for many people, partly because of the price rises that have already taken place in the past couple of years, however, this could start to put downward pressure on prices. While the economy is returning to some degree of normality, wage rises are still well below general price inflation. The continued increase in energy costs, imminent national insurance rises on top of rising interest rates, will all be considerations for those looking to purchase in the future.”
In the final quarter of the year, 17 local authorities in Wales reported quarterly rises, up from 13 in Q3 2021, the strongest showing since earlier in 2021. Every local authority recorded a rise in prices when compared annually.
Merthyr Tydfil experienced the strongest house price growth of any local authority both annually (27.9%) and quarterly (16.9%). Neath Port Talbot also saw prices rise by 16.9% in Q4, after a fall in the previous quarter.
Anglesey - down nearly 4% - recorded the steepest decline over the quarter. However, where authorities reported lower prices, the changes were less pronounced than those in the third quarter.
Estimates suggest that there were around 13,400 transactions in Q4 2021, 6% higher than in Q3 but 4% below the bumper 14,000 in the last quarter of 2020. This is mainly due to a significant drop in sales of detached properties compared with a year earlier - down from 4,600 to 3,700. While the number of semi-detached homes sold was also a little less than a year ago, the sale of terraces and flats rose.
For the year as a whole, sales across all property types were 45-50% stronger than in 2020. However, sales of flats have barely recovered to the volumes seen in 2019, whereas house sales are up by as much as a fifth.
