Welsh property transactions down two thirds as prices dip
The mutual’s house price index for Wales also showed a slight fall in the average house price of 0.7% compared to the first three months of the year – taking it to £191,880.
While this total is down from the record high of £193,299 recorded in January, it was 2.2% higher than the same point last year.
Principality said it was remaining cautious about making judgement on the market given the significant reduction in transactions.
The Welsh government chose to keep the property market closed for longer than in England to help combat the Covid-19 pandemic.
It has also chosen a far more cautious approach to the Land Transaction Tax cut, increasing the zero-rate threshold from £180,000 to £250,000 and excluding buy-to-let and second homes.
However, the society noted that most property observers were anticipating average prices in Wales would continue to rise from July to September.
Mike Jones, interim CEO at Principality Building Society, said: “We remain cautious about how we interpret average house price data for Q2 because sales are down by more than 60 per cent compared with the same period in 2019.
“The temporary increase in the Land Transaction Tax to help first-time buyers in particular, is likely to stimulate the market in the short-term, along with increased levels of activity following the easing of lockdown restrictions.
“However, once the UK Government furlough schemes come to an end in October, there may well be a rise in job losses and this, in turn, is likely to have a negative impact on consumer confidence in general.
“If this happens, then we would expect to see lower levels of activity in the housing market across the UK, and not just Wales.”
A north-south divide was apparent in the latest set of figures, with most of the house price growth occurring in South Wales, including the Vale of Glamorgan breaking the £300,000 average house price barrier.
Just seven local authorities saw prices rise on both an annual and quarterly basis, only one of which was in the north.
The Vale of Glamorgan’s 15% annual rise and 14% quarterly rise were both the highest in Wales over the respective periods.
Meanwhile Gwynedd in the north saw the largest annual fall of 8.9% and Carmarthenshire in the west saw the largest quarterly fall of 9.1%.
Different property types have seen varying movements in price during Q2 2020, with terraced houses increasing in value by an average 5.7% and detached properties by 3.8%.
Semi-detached properties have fallen by 2.6% and flats were down by 9%.
However, sales of all property types fell by at least 61%, adding uncertainty to the figures.