The Daily Telegraph - Saturday - Money
. . . as property prices in Wales rise faster than anywhere in Britain
House prices across Britain have risen at rates not seen since before the financial crisis, yet one country has outpaced all others.
Values in Wales increased by more than 13pc in the 12 months to May this year, according to the Office for National Statistics. This was a slight drop on the significant increase of 14.2pc recorded in April, yet still the biggest jump in the UK. Prices in England rose by 9.7pc, Scotland by 12.1pc and Northern Ireland 6pc.
Wales has been affected by the familiar property market cocktail: a change in housing needs because of lockdowns and a tax break have both boosted demand, and there has also been a lack of supply. But another factor is at play: a growing desire for second homes and holiday lets. Relatively affordable property has resulted in a spike in prices.
The Welsh land transaction tax holiday, the equivalent of the English stamp duty break, did not apply to second home or buy-to-let purchases, in an attempt to curtail the holiday home boom. Yet the Welsh second home market still surged. With its promise of rugged coastlines, dramatic scenery and affordable property, it overtook Cornwall as Britain’s holiday home hotspot this year.
This has been a cause for concern for the Welsh government, which introduced tax changes to discourage investors and protect locals from being priced out.
The market was also boosted by relocators moving in. Many recent buyers were those with young families, who flocked to Wales from elsewhere in the UK for the promise of more space and a better quality of life.
The biggest increases in transactions were among those buying second homes and relocating to Wales for the lifestyle, said Lucian Cook, of estate agency Savills.
“Transaction levels are comparable to those in the most active parts of south-west England,” he said.
Agreed sales in Wales were 24pc higher in the first half of this year than the 2019 benchmark, according to analysis of TwentyCi data by Savills.
Part of the reason is property in the country is cheap in comparison with other destinations and, even faced with additional tax surcharges, investors and homebuyers remain undeterred.
The average house in south- west England is more than 50pc more expensive than a Welsh property, with a price tag of £280,000 versus £184,000.
This makes the average house price in Wales marginally higher than its nil band land transaction tax threshold of £180,000. Much of the market will remain exempt from the charge, said Andrew Wishart, of Capital Economics, an analysis firm.
The strongest activity was seen in Torfaen, south Wales, where sales were up 71pc in the first six months of this year when compared with 2019 figures, and Monmouthshire, where sales rose by 66pc. Buyers also flocked to Pembrokeshire and the coastal district of Ceredigion, where sales increased by 51pc and 49pc respectively.
Soaring demand has meant bidding wars and gazumping have become commonplace, said Carol Peett, of West Wales Property Finders, a buying agent.
“In some cases buyers have neared completion only for the vendor to increase the asking price by £50,000 to £100,000.”
The second home market has steadily grown since Brexit, said Ms Peett, but it was the number of buyers permanently relocating to Wales that increased the most.
“We have seen a lot of people who grew up here, but didn’t stay because of work, come back. Now working from home has become the norm they can settle here,” she added.
Mr Wishart said: “Welsh house prices look even more affordable when you compare them with higher salaries from elsewhere. As hybrid working allows people to live farther from the office, there is more scope for property values to keep going up.”
Estate agents have reported that demand for properties in Wales still far outstrips supply, despite the land transaction tax holiday ending last month. Unlike its English counterpart, the Welsh tax break has not been tapered.
Despite this, buyer inquiries in Wales rose faster than any other region in the UK last month, according to the latest survey by trade body the Royal Institution of Chartered Surveyors.
PRICE £1.25m
AGENT Strutt & Parker
Tyn Y Coed Farm has a five-bedroom house, two cottages, and 12 acres of land