House price growth in Wales has finally begun to slow after rising steadily since January 2001, says the Principality.
The Welsh-based building society’s latest house price survey suggests the overall price rose with 32% in the 12 months ending in June.
This is a slight drop compared with the 32.2% reported three months ago.
According to the Principality, this is the first sign property prices in Wales are having a ‘time-out’ to allow recent sharp rises to fall back to a more sustainable level.
Principality chief executive Peter Griffiths says: "The current slowdown in house price growth is necessary. Price increases over the past year in many of Wales’ hotspots were at more than 10 times the general level of inflation and this was clearly unsustainable.
"In the long term the current slowdown will bring house prices more in line with inflation generally. A more sustainable if less dramatic rate of increase will underpin consumer confidence which is one of the most important factors affecting house purchasers," he says.
Despite an apparent slowdown, Griffiths says he does not believe the market will suffer a dramatic fall.
He says: "Interest rates are expected to rise to around five per cent of 5.25% by the end of the year. These rises are likely to continue to incrementally slow the housing market.
"However, there remains a shortage of supply of housing in Wales and with the continued high demand, the low cost and availability of mortgages, together with reasonable levels of job security, house prices in Wales are very unlikely to fall dramatically," he concludes.IFAonline
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