House price rises 'slowing down'

The Principality says the slowdown will help first-time buyers

House price rises in Wales may be slowing down for the first time in three years, according to new figures.

The Principality, the Welsh-based building society said years of rapid price rises had begun to slow.

According to the Principality's survey, price increases in the 12 months leading up to June 2004 were at 32% - slower than the 32.2% increase in March's figures.

The cost of the average house in Wales is now £120, 277.

The last time that house price increases slowed was in January 2001.

WELSH HOUSE PRICES North: £109,037 (+33.1%) Mid: £128,152 (+32.7%) West: £101,414 (+32.4%) South east: £129,659 (+26.4%)

In the months leading up to that month, house prices rose by 5.6% - slightly lower than the 5.8% increase registered in October 2000.

Since then, house price inflation in Wales has soared.

The Principality's latest figures show that in the last year, the average house in Wales has increased in value at more than 10 times the current 2.3% rate of inflation from £91,119 to £120,277.

Principality chief executive Peter Griffiths said the slowing of price inflation was beneficial for the housing market.

House prices in Wales are very unlikely to fall dramatically Peter Griffiths, Principality

He added: "The current slowdown in house price growth is necessary.

"Price increases over the past year in many of Wales' hot spots 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 purchases.

"This slowdown is good news for some, particularly those who are looking to enter the market for the first time."

Bangor increases

Mr Griffiths said the survey showed a number of towns and cities across Wales were catching up with prices in Cardiff.

He added: "House prices in Bangor are increasing at almost double the rate of those in Cardiff and it now costs more to buy a house in Bangor than it did to buy a house in Cardiff only two years ago."

The average cost in Bangor has risen to £105,140 in the past year, up by 40.1% on the previous year's £75,047, while prices in Cardiff have risen by an average of 23.6% to £155,288.

But Mr Griffiths said although price increases had slowed, they were unlikely to fall.

He added: "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."