Wales house prices above pre-slump levels, Principality says

The average house price in Wales is now higher than in 2007 before the slump caused by the financial crisis, according to a new index by the Principality.

The average price in Wales is £174,319 compared with a peak of £170,142 in October of 2007.

The average price hit a low of £150,000 eight years ago.

The building society said it expected modest growth throughout 2017.

Unlike some other house price indexes from mortgage providers, the Principality uses figures from sales registered with the Land Registry rather than its own loans.

The rate of growth is lowest since 2013.

However, the Principality believes this might be distorted by a jump in house prices at the start of last year, ahead of the introduction of a 3% surcharge in stamp duty on second homes and buy-to-let properties.

Higher employment levels, continuing consumer confidence and record-low interest rates are factors behind the rise in prices overall.

The average has fallen in five areas in the past 12 months - including Cardiff, where prices fell 2.9%.

The increase in demand at the start of 2016 is probably a significant factor in this.

Merthyr Tydfil showed the highest annual growth - 15.1%, while prices rose by 8% in Wrexham.

Peter Phillips, owner of Derek B Phillips Estate Agents in Merthyr Tydfil, said house prices there had dipped following the 2008 recession but were now returning to previous levels.

"Because of the demand and scarcity of some houses, certain places are getting more interest than they would have years ago," he said.

"Prices probably have gone up but you have to look at the overall picture, they have been down for years.

"Merthyr is really active at the moment and there's a lot of first-time buyers who want to buy a house. It's about getting the amount of properties on the market to meet the demand."

He added that the town's proximity to the Brecon Beacons, and developments such as the Heads of the Valleys road and new out-of-town retail areas, made it an attractive - and affordable - place to live.

However, the £174,319 average house price figure does not include inflation. According to the Bank of England's inflation calculator, the figure would be £216,000 in real terms.

Tom Denman, interim finance director at the Principality, said: "Over the last four years the average house price in Wales has steadily increased, but what we haven't seen, unlike in some other parts of the UK, is that real accelerated growth or spikes in growth.

"This tells us that the annual growth rate is starting to slow but is still in an upward position for this first quarter of 2017."