House prices in Wales expected to fall by 10% as downward trend continues

Mar 29 2008 by David Williamson, Western Mail

HOUSE prices across the UK fell for the fifth month in a row during March as the market continued its downward trend.

New data shows the average cost of a home in the UK dropped by 0.6% during the month to stand at £179,110, according to Nationwide Building Society.

Welsh commentators said house prices in the region are expected to fall by up to 10%.

Annual house price growth has also continued to ease, slowing to just 1.1% – its lowest level since March 1996. This is less than half the year-on-year gain of 2.7% recorded during February.

The average home now costs just £2,027 more than it did in March last year, with prices falling by 2.9% during the past five months.

Mick McGuire, director of business development for the Wales-based Principality Building Society, predicted prices would remain flat or dip for around a year and then rise in line with inflation.

He said, “Even with this modest correction house prices are still 50% higher than they were five years ago. House prices have gone up too fast for 12 years and this is good news for first-time buyers.

“House prices will find a new stability and the market will return to normal.”

Welcoming a cooling in the market, he said, “A pause is probably long overdue.”

One factor, he said, was that people were now putting off purchases while they waited for the best deal.

He said, “More of the discretionary purchasers are sitting on their hands, waiting to pick up a bargain or for prices to ease.”

But Francesca Tanguy of Cardiff-based property consultants Cooke & Arkwright said some families were deciding they could wait no longer.

She said, “We’re talking to the same people as last year. They didn’t buy last year but they feel the family needs to move on.”

Ms Tanguy acknowledged the market had chilled in recent months.

She said, “The last quarter of 2007 was one of the harshest I’ve ever known.”

January, she added, suffered from “atrocious” weather which discouraged househunters. Since then, though, she has been surprised by the level of interest from English customers. She said, “It’s looking a lot better than I would have thought it would. . . There seems to still be quite a lot of relocation from the Home Counties.

“A lot of people are looking for a better quality of life with the children attending a local Welsh school rather than a high pressure one in the South-East.”

However, sellers determined to make a transaction are cutting prices.