House prices have risen faster in Wales than any other region, at 15.3% year-on-year, Nationwide’s house price index has revealed.
This means house prices in Wales now average at £190,700 after rising by just 3.7% on a quarterly basis.
The second fastest growing region is Northern Ireland (14.3%), followed by Yorkshire and the Humberside (12.3%).
This compares to annual house price inflation of 8.5% in England, slowing from 9.9% in Q2.
Overall growth has fallen back slightly since the stamp duty holiday prompted head over heels demand, falling to 10% in September from 11% in August.
Robert Gardner, chief economist at Nationwide, said: “As we look towards the end of the year, the outlook remains uncertain. Activity is likely to soften for a period after the stamp duty holiday expires at the end of September, given the incentive for people to bring forward their purchases to avoid the additional tax.
“Moreover, underlying demand is likely to soften around the turn of the year if unemployment rises as government support winds down, as seems likely.
“But this is far from assured. The labour market has remained remarkably resilient to date and, even if it does weaken, there is scope for shifts in housing preferences as a result of the pandemic – such as wanting more space or to relocate – to continue to support activity for some time yet.”
Yorkshire & Humberside was the strongest performing English region for the second quarter in a row, with prices up 12.3% year-on-year, followed by the North West, which saw an 11.4% rise.
London was the weakest performer, with annual growth slowing to 4.2% from 7.3% last quarter.
The surrounding Outer Metropolitan region, which includes places such as Luton, Watford, Sevenoaks and Woking, also saw a softening to 6.8%, down from 8.2% in Q2.
Sundeep Patel, director of sales at Together, the specialist lender, said: “Government support and tax reliefs certainly helped to inflate house prices this year, and in some areas, demand is still at record levels.
“However, with stamp duty and furlough winding up, and the Bank of England deliberating to whether to raise interest rates, the bubble created by frenzied property buying is soon likely to pop.
“That said, demand for buy-to-let has been on the rise in certain regions lately, as property investors bid to capitalise on local prices doing well in the post-pandemic market.
“Even with the prospect of activity calming, there will be a widening gap for specialist lenders to cater to the ever-changing financial needs of borrowers.”
Tomer Aboody, director of property lender MT Finance, said: “Although some regions have seen a stronger increase in values, such as Wales, Northern Ireland and some parts of England, these have historically been at a lower pricing point than other regions where growth has been slower.
“Any rise is therefore more visible and significant, although historically this could also be reflected in a declining market, where potentially “non prime” areas are the first and biggest fallers in percentage points.”
Raising a deposit remains the main barrier for most prospective first-time buyers.
A 20% deposit on a typical first-time buyer home is now around 113% of gross income – a record high.
Nigel Purves, chief executive of Wayhome, said: “Whilst there was a slight cooling in house price growth, house prices remain far higher than before the pandemic – causing major affordability issues for aspiring homeowners.
“With the stamp duty holiday drawing to a close and the government’s pandemic support coming to an end, most would-be buyers don’t have an easy road ahead.
“Average deposits are sat at £60,000, and strict lending criteria mean that the low mortgage rates aren’t available or accessible for most people. If we’re going to see real and lasting change for the UK’s reluctant renters, there needs to be focus on a pushing the market to adopt a more flexible, innovative, and realistic approach that will help a greater number of people take their first step onto the ladder.”