Wales Housing Market Update

Following yesterday’s Budget announcement (3rd March 2021), Bay Estate & Letting Agents looks at the state of the state of the Housing Market in Wales, Supply, Demand, Trends and projections for the year ahead.

SALES:

According to the latest Zoopla statistics, average UK house prices are up 4.3% in 2021. Wales is currently leading from the front compared to the rest of the UK with prices up 5.6%. Focusing on our home city, Swansea is showing a 4% rise in house prices.

So, what is driving this? Demand.

A year of pandemic restrictions and lockdown has resulted in “search for space.” As home working becomes increasingly normalised, people are looking for different locations and types of houses. Outdoor space and versatile homes with the potential for home office and gyms, have become sough-after qualities. Whereas, commuting distance is becoming less of a factor as it is expected that office trips will reduce. We are already seeing what is called the “Halo Effect” in the larger cities, where people are looking to leave the cities for new homes in the suburbs or countryside.

The average value growth for houses is up 4.3% and, although less striking, the value of flats and apartments is also up 1.8%

This Search for Space will continue to be the drumbeat as we head into the summer and, hopefully, out of lockdown. This is encouraging as Wales has not seen the same tax concessions as the England Housing Market. Land Transaction Tax (LTT), Wales counterpart to England’s Stamp Duty Land Tax, has a nil band rate up to £250,000 but this is due to come to an end on 30th June 2021, as announced by the Welsh Government following yesterday’s budget.

What of Supply?

Now there is a disconnect between Supply and Demand. According to Zoopla, Demand is higher than its been for the last three years but as a counterpoint, Agent’s Sales stock is lower than its been in the last three years.

What has caused this lack of supply? Overall, people looking to sell their homes have been cautious about viewings due to Covid-19 and hesitant to market, perhaps preferring to wait and see what happens. What is becoming clear is that there are a lot more first-time buyers in the market with nothing to sell, so demand is high but with no further sales stock added to the market.

Average demand is up 30%. However, Supply is down 10%.

What are the Drivers of Demand?

1. Pent-up demand. LTT Holiday.
2. A Reassessment of housing has unlocked new demand.
3. Introduction of 95% mortgages in the Budget

Forecast for the remainder of the year?

The housing market is predicted to slow towards the end of the year as the ramifications of Corona virus on the economy take hold. That said, Zoopla predicts a 2% Growth at the end of the year.

RENTING:

So, what of the rental market? This is also experiencing growth but not quite of the same level. Average rents across Wales are up 2.7% according to Zoopla with modest growth in Swansea of 0.7%. Higher rentals are being achieved in the outer areas with downward pressure in the cities, again replicating the Halo Effect.

UK-wide, rental demand is up 21% with Supply up 11% so again, supply is outstripping demand. Family homes are taking 30% less time to rent, an average of 13 days from listing. Flats and apartments are also renting also renting quickly but not at the same speed.

If you are looking for more information or would like to discuss options to rent, buy or sell your property, please feel free to contact Bay Estate & Letting Agents and we’ll be happy to talk.