Despite annual house price inflation of 12.5%, there was some sign that the strong pace of increases seen around the turn of the year have begun to abate, with the quarterly rate of increase now down to 1.4%.
This is likely to be a result of the Land Transaction Tax (LTT) holiday coming to an end in June, and could indicate price growth slowing in the second half of 2021.
Principality’s House Price Index estimates that there were around 13,400 transactions in Q2 2021, nearly treble the COVID-depressed level of the same time the previous year (4,800 sales), but also significantly higher than the more ‘normal’ period of Q2 2019 (11,000 sales).
All 22 local authorities reported rises on an annual basis in Q2, repeating the performance of the previous quarter.
Prices in eight authorities reached new peaks in Q2 – Blaenau Gwent (£128,441), Bridgend (£214,081), Conwy (£222,944), Merthyr Tydfil (£159,101), Neath Port Talbot (£160,324), Rhondda Cynon Taf (£150,726), Vale of Glamorgan (£330,396) and Torfaen (£198,476).
Nine local authorities reported annual price increases of more than 15%, with Blaenau Gwent (19.6%), Bridgend (19.4%), Carmarthenshire (19.9%) and Conwy (19.7%) all reporting an annual rise of almost 20%.
Many of these local authorities also reported strong quarterly gains, in particular Bridgend (11%) and Merthyr Tydfil (15%).
A small majority of local authorities (12 of the 22) reported minor quarterly decreases, which may be a further sign that a gentler period of price inflation lies ahead.
Three major Welsh cities – Newport, Swansea and Wrexham – along with Powys, all reported quarterly prices around 5% lower.
Tom Denman, chief financial officer at Principality Building Society, said: “The scale and strength of the housing market in Wales to date does suggest that this momentum will continue into the final quarters of the year.
“Clearly, the stimulus effect of the Land Transaction Tax holiday will have disappeared by then, and because some purchases were brought forward to capture that benefit, there will be an inevitable dip in activity.
“Alongside this, the furlough scheme ends in September, thus further revealing the underlying state of the economy and employment.
“Various forecasts suggest that Wales -along with other parts of the UK- will see house price inflation down to just under 5% in 2022 and onwards.
“Much will depend on the course of interest rates and the economy, but the mortgage market remains very competitive with rates having fallen in recent months after slightly increasing at the height of the pandemic.”
