2013 property forecast – what’s next for property in Wales

Tuesday 18th December 2012

A general shortage of residential properties and increased mortgage competition is expected to push Welsh property prices marginally higher in 2013.

The latest report by property search website Rightmove predicts an average rise of below inflation 1% in sellers’ asking prices in 2013, but what will happen to actual underlying values?

According to the Land Registry, the average price of a home in Wales currently stands at £185,505, up 1.2% year-on-year, but Savills, like many property experts, think that prices will trickle higher.

“When you consider Wales as one territory, our forecasts predict an 11.5% growth in prices over the next five years,” said Peter Reilly, Savills head of residential sales in Cardiff. “However, if we focus on Cardiff, The Vale of Glamorgan and many of the coastal hotspots, that figure rises to 15.5%, which shows the continuing demand for the most desirable areas.

He continued: “While it is difficult to qualify, we believe that there has been an improved sentiment over recent months, which will continue into 2013. There appears to be more positivity and willingness on the side of both buyers and vendors to make deals happen. With a good level of stock available, purchasers now have a selection from which to choose.

“We are seeing a convergence of opinion whereby buyers are being a little more optimistic and sellers continuing to be more realistic; this will support transaction levels over time. Many purchasers who were previously holding out, biding their time until the climate improved, are now taking a leap of faith and joining the market again with the belief that after next year, values will continue to improve.

“Following a quiet final quarter of 2012 for new buyers registering, we are anticipating an uplift in registrations in the first few months of next year, reflecting the seasonal pattern. Overall we are cautiously optimistic about activity in 2013.”

Russell Hill of search agents Haringtons UK commented: “2012 has been a stuttering year, or one of smoke and mirrors by promising much then failing to deliver and picking up late on.

“Buyers and sellers do realise that money is probably on balance better invested in property than a bank, at least you can live in it, and if the market were to fall 10% you would still have 90% of your money with potential in the longer term to recoup it all. Banks are not offering that kind of security. There is light at the end of the now 5 year tunnel. Property is often seen in 5-10 year cycles,  when we look back at a tricky 2012 we may just have seen the stabiliser, barring any unforeseen world disaster or chancellor rocking the 2013 boat.”

Adam Feather of Robert Anthony estate agents said: "The property market across much of Wales has been somewhat sluggish in recent years. But I do think that transactions will rise by around 3% in 2013 on the back of greater mortgage lending, before surging in 2014 when true signs of recovery start to emerge.

“While Welsh property prices are unlikely to outstrip inflation next year, I do believe that longer-term prospects are slightly more promising. I forecast no more than 2% capital growth in 2013. 

Nigel Favas, managing director of Reeds Rains estate agents, who has branches in Wales, commented: “The Welsh housing market is struggling due to the lack of mortgage finance for lower income borrowers, caused largely by strict lending criteria, and this contributed to house prices sinking for the si x th month in a row in October. Although sales activity increased by 23% between September and October, this says as much about the subdued number of sales in September as it does an improvement in the market. It is sobering that we are currently seeing lower house prices and this is the case in 18 of the 22 local authority areas in Wales .

“If we dig a bit deeper a slightly more positive picture emerges for first-time buyers. By and large, first-time buyers have been at the prickly end of a dysfunctional mortgage market since 2008. Yet unlike other parts of the UK , Wales has seen an overall boost in activity at this end of the market, although it is from a comparatively low base. The number of loans advanced to first-time buyers rose in the third quarter by 10% and on average, first-time buyers in Wales were able to use smaller deposits to secure a mortgage than in the UK overall. Welsh buyers have an e x tra advantage, particularly compared to their English counterparts, due to first-time buyer property in Wales being cheaper than other parts of the UK , meaning the necessary deposits that need to be set aside are smaller.

“A long term recovery in house prices depends on a substantial, structural improvement in the ability of banks to lend to first-time buyers. Lenders need more help to actually lend. Banks are in a tough place at the moment; feeling pressure to safeguard a certain level of capital that has led to strict lending criteria which in turn has stifled the lower end of the market. The Welsh government is taking steps in the right direction, with plans of new and affordable housing in Wales as part of a new strategy to encourage greater activity in the housing market. The launch of the mortgage indemnity scheme should help people to access higher loan-to-value mortgages from Spring ne x t year. The government’s Funding for Lending scheme is expected to have an impact in the early months of 2013 but it will take some time before we can assess its true impact."


comments powered by Disqus
Premium Articles
Sign up
Live Chat