Richard Sexton, director of e.surv, part of LSL Property Services, comments: “The Welsh housing market received a boost in February, but it is by no means set on the road recovery. House prices rose £766 over the month, but remain £458 lower than February last year. And prices have fallen back to their December 2010 levels – a 3.5% fall over a thirty six month period.
“The bad weather may go some way to explaining the lack of sales at the start of the year. Prices continue to fluctuate, as they have done over the past twelve months, and lending conditions remain tough. House sales are still very low by past standards, primarily due to the lack of activity from the bottom end of the market and the difficulty first time buyers are having in getting loans.
“Instead, older, wealthier buyers are the ones dominating activity, which is preventing house prices from falling even further. There is an affordability crisis in the property market which is alienating first-time buyers, many of whom are struggling to drum up a big enough deposit. Mortgage lending remains constrained and this is freezing lots of first-time buyers out of the market. In fairness to banks, they have their hands tied by strict requirements on the amount of capital they have to hold in reserve, which is limiting their capacity to lend.
“The problems in the economy don’t help. The Welsh economy is listing. It has taken heavy blows from inflation, weak wage growth, public sector cuts and a lack of private sector investment. These blows haven’t sunk it, but they have left it relatively incapacitated. Given these economic problems, the Welsh Assembly’s decision to cancel its NewBuy scheme is disappointing, though the UK Help to Buy proposals may ultimately fill this gap.
“Thankfully, 2013 is set to be the best year for the housing market since 2007, and brighter days are moving onto the horizon. Mortgage rates are lower and there is a better range of mortgage deals compared to a year ago. And the first-time buyer market is slowly picking up – albeit from a very weak base. With the capital’s football team set for the Premiership next season, perhaps better days could lie ahead in 2013.”
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