House prices and sales activity in Wales rose in 2024. Greater stability in mortgage markets improved buyer confidence and increased sales demand. 2025 has begun cautiously, but we expect gradual falls in interest rates over the rest of the year to enable further price growth.

New homes completions reached their lowest level in nearly a decade in 2024. Planning consents increased slightly, but remain low overall,  meaning completions are unlikely to grow in the near term.

Prices rise, but mixed signals from market indicators

We expect house prices in Wales to outperform the UK average over the next five years at 25.2%, given that affordability is less stretched than elsewhere. Growth will be supported by falls in interest rates over the next three years, although the Bank of England’s approach to rate-cutting is expected to remain cautious.

House prices in Wales rose by 2.7% in 2024, according to Nationwide. Supply and demand were both strong in 2024 and in January 2025, but demand fell sharply in February, according to the RICS. We tend not to place too much emphasis on a single month of data, but this may reflect a weakening in sentiment in early 2025, possibly linked to December’s 1% increase in Land Transaction Tax (LTT) for second homes. Outside of this, sales market indicators are broadly positive.

Market activity has also increased. Transactions in 2024 were 7% higher than 2023. They remained -14% below the 2017–19 average, but are showing signs of continued improvement – sales in January 2025 were up 22% on 2024 and just -5% below the 2017–19 average for January. Further improvements will likely rely on mortgage rates continuing to fall, but sales expectations are improving, suggesting activity can grow further.

Annual price growth is positive in most Local Authorities (LAs) in the year to November, led by five LAs in South Wales recording more than 4% annual growth, according to the lagged Land Registry price index. The index shows price falls in several coastal holiday hotspots. This may reflect a recentring of demand around urban locations as employers request in-person attendance more often. But there may also be weaker demand for second homes in areas like Pembrokeshire and Gwynedd, following increases in the additional Council Tax charged on second homes in these locations. This trend may be further exacerbated in 2025 by the recent LTT changes for second homes.

Rents for new lets grew by 4.7% in the year to January 2025. Supply remains constrained, with rental listings per branch -31% below the 2018–19 average in February, according to portal data. But capacity for further rental growth is limited by tenants’ inability to bid rents up further, so we expect rental growth to slow in the next few months.

Completions fall to lowest level in almost a decade

New homes completions in 2024 fell to their lowest since March 2015 on an annual basis, falling -10% year on year according to EPC data. Starts have also fallen away and sat below completions in the year to September, according to Stats Wales. This leaves them close to their lowest on record on an annual basis.

And planning consents remain very low, despite a small increase (up 8%) across 2024. They remain -36% below their 2022 peak, according to the HBF. This means completions are unlikely to grow significantly in the near term.

Affordable housing delivery has increased but may miss Welsh Government targets without further support. A provisional 3,660 new affordable homes were delivered in the year to March 2025, the highest level on record and 12% up on the previous year, according to Stats Wales. But for the Government to meet its target of delivering 20,000 affordable homes by March 2026, an unprecedented 7,040 affordable homes must be delivered in the next year. Welsh Government has allocated £437m to Social Housing Grant for 2025/26, up 18% on 2024/25, to help increase delivery. But this figure is some way below the £580–£740m which Audit Wales suggested would be necessary to meet their target.

The Help to Buy Scheme has been extended for a further 18 months to September 2026, retaining the competitive advantage new homes in Wales benefit from. Use of the scheme had been increasing but has plateaued in the last six months. It accounted for 8.4% of new build purchases in 2024, much lower than the 25% at its peak in 2018. This is likely because the value caps remain the same as in 2014, which limits the number of homes eligible for purchase under the scheme today. Read more about the extension of Help to Buy here.

Demand and supply indicators in the sales market were much more positive in 2024, on the back of falling mortgage rates and improved confidence.

Demand fell sharply in February 2025, though, with a net balance of -57% of surveyors reporting a reduction in demand in the month. However, we tend not to place too much emphasis on a single month of data. While this may reflect a weakening in sentiment in early 2025, other measures, such as sales expectations, remain positive (+15% net balance) in February. The broad trend over several months remains that demand is cautiously positive.

House prices rose by 2.7% in the year to December 2024 in Wales, according to Nationwide. Prices are now -2.3% lower than their Q3 2022 peak. Prices were flat in Q3, but rose again by 0.9% in the final quarter.

For six consecutive months leading up to February 2025, the majority of surveyors reported price increases with a net balance of +6% in February according to the RICS survey.

In slightly contradictory fashion, surveyors’ expectations for future price growth (over the next three months) have been negative since July 2024, with a net balance of -29% expecting price falls in February.

Market activity has increased in 2024, as higher demand and supply have created a slightly more liquid market.

Transactions in 2024 were 7% higher than 2023. However, activity remains -14% below the 2017–19 average. Current estimates for January suggest a continued improvement with transactions in the month 22% above January 2024 levels and only -5% below the 2017–19 average for January.

Transaction volumes are likely to continue improving gradually as mortgage rates fall. While sales agreed turned negative in February according to the RICS, sales expectations remain positive.

Completions fell to their lowest level in almost a decade at the end of 2024. Consents remain very low, despite improving marginally, meaning completions are unlikely to grow in the near term.

New homes completions fell by -10% in the year to December 2024, reaching their lowest annual level since March 2015, according to EPC data. Worryingly, starts have fallen below completions in the last six months, according to Stats Wales.

Annualised planning consents rose by 8% in the last year, but remain down -36% since their 2022 peak, according to the HBF. The outlook for future delivery, therefore, remains weak.

Affordable housing delivery has risen, but must rise further to meet Welsh Government’s target of delivering 20,000 affordable homes by March 2026.

A provisional 3,660 new affordable homes were built in the year to March 2025, the highest level on record and 12% up on the previous year. But with one year left, a further 7,040 homes are still needed to meet the target – more than double the five-year average.

Welsh Government has allocated £437m to Social Housing Grant in its budget for 2025/26, an 18% increase on 24/25, but lower than the £580–£740m which Audit Wales suggested would be necessary to meet the target.

Housing delivery exceeded Welsh Government housing need in three Welsh regions in the year to Q4 2024, but fell short in the South West. The more ambitious targets laid out in Local Development Plans were missed in all regions.

Total delivery exceeded the central estimate of need by 20%, but fell below the higher estimate by -2%, according to EPC data.

These housing need figures use household projections from 2018, which may not reflect current housing need in Wales. England has recently updated its housing need calculations. If the same methodology were applied to Wales, current delivery would fall -43% short of need overall.

Numerous consultations ongoing and scheduled for South Wales as local planning authorities respond to Welsh Government-issued non-conformity objections. 2025 looks to be a particularly active year for plan making across South Wales with consultations having taken place or anticipated across the three city authorities.

Of particular interest will be seeing how those local planning authorities that have received a non-conformity objection will respond. Whilst Caerphilly’s second Preferred Strategy did not receive a non-conformity objection (after its first one did), Rhondda Cynon Taf, Newport, and Torfaen are due to hold consultations later this year following Welsh Government non-conformity objections at Preferred Strategy stage.

The Help to Buy scheme has been extended, but its use remains well below peak and has begun to plateau. 8.4% of new build purchases in the year to December were made through the scheme, compared to 6.2% a year earlier, but down from 25% at its peak in 2018.

The scheme enables buyers to take on more debt and purchase more expensive homes than they would otherwise be able to afford. Use of the scheme may rise as mortgage rates fall in the next year, but the impact of falling mortgage rates thus far has been limited.

The introduction of a lower value cap in May 2021 caused take-up to fall sharply, and numbers haven’t recovered since, despite the higher price cap being reinstated in March 2023. The price cap now remains unchanged from its 2014 level under the scheme extension to September 2026, which limits the number of homes eligible for purchase with HtB. Read more on the extension here.

Rents on new lets grew by 4.7% in the year to January, according to Zoopla. Affordability pressure is beginning to restrict growth in the rental market, although rental growth remains elevated for now.

Rental growth for all tenancies (including renewals and existing leases) was 8.4% in the year to January, according to the ONS, suggesting the strong recent growth in new tenancies is now filtering through to the wider market.

Supply remains constrained, with available rental listings per branch -31% below the 2018–19 average in February, according to Savills analysis of portal data. But with capacity for further rental growth limited by affordability, rental growth is still likely to moderate looking forwards.