Average house prices in Wales have fallen for the first time since the pandemic, mirroring the more ‘subdued’ picture across the rest of the UK, according to Principality Building Society.

Data from the society’s House Price Index for Wales indicates average house prices in the country are now £245,101, down 1.6% on the record high of just over £249,000 seen in the last quarter.

It means that in comparison to the same time last year, the annual price rise is 5% – half the rate of three months earlier and the lowest annual rise since 2020.

While there are variations across the regions of Wales, more local authorities reported quarterly declines rather than increases in the first quarter of 2023. Only four of 22 areas recorded new peak prices – Blaenau Gwent, Newport, Vale of Glamorgan and Torfaen.

The society says transactions were hit significantly following last autumn’s mini-Budget and the subsequent rise in rates. This resulted in the weakest first quarter since 2020, with sales down 17% year-on-year and 26% quarterly, to just over 9,100 transactions.

Sales of detached properties alone were down 23% over the year.

Principality head of distribution Shaun Middleton comments: “Much like the rest of the UK, housing market conditions in Wales are more subdued than in previous quarters. We are at a point in the housing market cycle where wider economic factors are weighing more heavily on, and affecting, the existing underlying demand for homes. Future prices will be determined by key variables such as the movement of interest rates, inflation and the impact of the cost-of-living crisis.

“The radical shift in mortgage rates over the last year cannot be disregarded, moving from a decade at around 2% to closer to 5% in the space of 12 months.”

Rates are now expected to settle around this level for the rest of this year and into next, with increased signs of lenders competing to attract business. Lenders are looking for new ways to support borrowers who are struggling with mortgage affordability, Middleton adds.

While more areas of Wales reported falls on a quarterly basis, year-on-year the picture was different, with 20 of the 22 local authorities showing an increase in property prices. Annual falls in nominal terms were reported only in Gwynedd and Anglesey.

By property type, average prices for Q1 are £364,275 for detached homes, £226,347 for semis, £171,290 for terraced and £152,576 for flats.

The Principality index for Wales comes as Land Registry figures revealed an easing in UK house price growth to 5.5% in the year to February.

This put the average UK cost of a home at £287,506.