(Commonwealth)_ The average house price in Wales has risen by 4% year-on-year, reaching £238,483, according to the latest data from the Principality Building Society. This growth, however, presents a mixed regional picture, with property values rising in 13 local authority areas, while nine areas recorded a decline over the same period. Much of the current housing market strength appears to be concentrated in South Wales. Notably, Bridgend, Blaenau Gwent, and Caerphilly saw record-high property prices between January and March 2025. These regions are leading the recovery, reflecting a broader rebound in the Welsh property sector as the year begins.
Transaction volumes have also increased significantly. The number of housing sales in the first quarter of 2025 rose by 20% compared to the same period in 2024. This momentum is encouraging for homeowners and prospective buyers alike, as activity in the market continues to pick up pace. First-time buyers and those looking to move up the property ladder are actively engaging with the market. For example, couples living in smaller flats are now making efforts to transition into more spacious homes, especially as household dynamics change and the need for more living space becomes apparent. These prospective buyers are entering a competitive market where demand remains strong and properties are selling quickly, often before potential buyers can arrange viewings.
Recent changes in the Bank of England’s base interest rate have further contributed to the market’s liveliness. Reductions in the rate have made mortgage borrowing more accessible, with expectations of additional rate cuts later in the year. These lower borrowing costs are making it easier for buyers to enter or move within the housing market.
Estate agents report heightened activity across various price brackets, stating that properly priced and well-presented homes are generating considerable interest. However, despite the increased activity and price growth, challenges remain—particularly in terms of affordability.
The Principality’s analysis notes that, while transaction volumes suggest growing buyer confidence, the rising cost of living is still a concern. Increases in utility bills, energy costs, and general household expenses continue to place pressure on budgets, particularly for those on lower or fixed incomes. These financial pressures may temper further growth or delay purchase decisions for some buyers.
Additionally, coastal and rural areas in Wales are facing unique challenges, some of which may be influenced by recent government interventions aimed at regulating second home ownership. Local authorities in tourist-heavy areas have introduced higher council tax rates for second homes, while the Welsh Government has increased the land transaction tax on additional properties. These policy changes are aimed at improving housing availability for local residents, but they may also be dampening demand in certain locations.
Despite these challenges, the broader outlook for the Welsh housing market remains optimistic. The final quarter of 2024 and the first three months of 2025 together show a consistent pattern of growth in both property prices and transaction numbers. The Principality Building Society views these findings as a positive start to the year.
Looking ahead, further reductions in the Bank of England’s base interest rate are anticipated, which could help ease affordability concerns and support continued buyer activity. If economic conditions remain stable and mortgage rates become even more favorable, more households may be able to enter the housing market, contributing to sustained growth throughout 2025. While regional differences and external pressures persist, the overall direction of the housing market in Wales indicates continued resilience, supported by a combination of lower interest rates, buyer confidence, and steady demand.
