Property prices in Wales grew at a faster rate than predicted in 2017, with an annual price growth of 5.3% to the end of September, according to the Land Registry. The market is some areas such as Pembrokeshire and Ceredigion was exceptionally busy, according to Carol Peett, Managing Director of buying agency, West Wales Property Finders.
“We have not seen this much activity in the housing market in West Wales since the early 2000s, with properties from bungalows right through to large country houses in high demand”, she said. “Properties with sea views were particularly popular. Many clients bought them as buy to holiday lets due to the upswing in staycationers. Additionally they are looking to the long term with the aim of retiring to them at a later date”.
“There was also an increase in ex-pats looking for smaller properties. Many are returning to the UK due to Brexit, having previously been living in France, Spain and Italy, and are taking advantage of the weak pound”.
“2017 has also seen an increase in people moving to West Wales from London and the South East as a lifestyle choice; buying properties with holiday letting cottages, camp sites or just an annexe to let through AirBnB. Their story is always the same; they are fed up with the overcrowding and frenetic lifestyle and are moving here for a better quality of life and to get more property for their money. These buyers tend to be in their mid 40s or early 50s. Whilst young families tend to move here to buy smallholdings to produce organic food or start small businesses and give their children a good old fashioned childhood out in the fresh air. The roll out of Superfast broadband has allowed more remote working so we have seen an increase in families moving here where they can work from home and perhaps just attend their offices in London, Bristol, Cardiff, etc. for one or two days a week”.
“However, there are some big clouds on the horizon. If the Welsh Assembly continues with its plans to introduce the new Land Transaction Tax in its current form on April 1st 2018, this is highly likely to have a major impact on the Welsh property market. The move will be a huge disincentive for older people to downsize. This will leave growing families unable to move up the property ladder”.
“In contrast to the rest of the UK where first time buyers will not have to pay Stamp Duty on purchases up to £300,000 and a reduced level between £300-£500,000; those in Wales will only be entitled to pay no Land Transaction Tax on purchases up to £150,000, penalising them for living in Wales. Likewise other buyers will be hit with higher levels of tax on properties over £400,000”.
“I predict that there will be a frenzy of buying at the beginning of the year to beat the 1st April deadline, similar to that seen prior to the Stamp Duty rises under George Osborne. The impact of these punitive taxes from 1st April will initially see a drop in the amount buyers will offer for properties they wish to purchase to take account of the additional tax levied. This will be followed by a small drop in asking prices before it levels out again. Transaction levels will fall and, as always, it will be properties that sit just above the tax bands that will fair worst. Overall my forecast is that prices will end 2018 at a similar level they began the year with prices for properties under £400,000 rising but those at the higher end of the market remaining static to take account of the extra tax levied”.