Principality Building Society's recent data indicates a year-on-year drop in the average house price in Wales to £234,086 by the end of 2023 due to ongoing economic challenges.

The Wales House Price Index, utilizing Land Registry data, reveals a 6% decrease in house prices, equating to £15,000 less compared to the same period the previous year, when the peak price of £249,076 was recorded.

While 2023 witnessed the largest year-on-year decline in Wales' average house price since 2009, prices are still 25% higher than five years ago. Among the 22 counties, six experienced a double-digit decrease, with Merthyr Tydfil witnessing the most significant drop at 21.2%.

However, four areas defied the downward trend, recording an increase in average house prices. The Isle of Anglesey saw the highest rise at 8.4%, reaching an average price of £281,400. Gwynedd in north Wales reported a 3.5% increase, reaching £251,406, while Cardiff and Caerphilly achieved record high prices at £308,648 and £207,904, respectively.

Shaun Middleton, head of distribution at Principality Building Society, acknowledges the housing market's challenges but notes positive signs, including lower inflation and an anticipated decline in the Bank of England rate during 2024. With the expectation of several rate cuts, mortgage markets have adjusted, fostering competition and potential further rate reductions. Consumer confidence is gradually improving, and surveyor respondents foresee increased activity, potentially leading to price stabilization.