House prices in Wales are expected to rise by 10.4% over the next five years, according to predictions by global property consultants JLL.
That's higher than prime central London where prices are predicted to grow by 8.7% between 2018 and 2022.
Whilst nationally a range of factors will deliver more moderate house price growth across the UK and lead to a more stable market, Wales – and South Wales in particular – shows little sign of slowing.
The latest RICS (Royal Institution of Chartered Surveyors) Residential Market Survey states Wales has seen the most positive price growth reported by its members, followed by Northern Ireland, the North West and the Midlands. 50% more RICS members reported having seen price increases in Wales compared with a wide majority of members in London reporting prices in their region to falling.
There are a range of factors for this positive outlook, not least the announcement that the Severn Bridge tolls will be scrapped by the end of 2018, opening up residential markets in South and South-East Wales to a host of commuters working in Bristol and the South West. Other major schemes include the electrification of the South Wales rail line which will improve links with London Paddington and the South Wales Metro scheme aiming to improve transport links across the Cardiff capital region.
This is complemented by a broadening commuter belt, agreement of Local Development Plans and the growth of agile working, with more and more people working remotely from multiple locations and from their homes.
Matthew Wright, associate director in JLL's Cardiff office said:
“There has been a general undersupply of residential property in key Welsh conurbations for a number of years. This has started to be addressed with a number of large residential projects either mooted or already underway along key commuter links such as the M4 motorway and the A48.
“Only last month, the Severn Growth Summit mapped out opportunities for greater collaboration and investment, creating a ‘western powerhouse' for Cardiff, Newport and Bristol similar to that seen in the North West.
“Almost a decade worth of pent up demand for development – both residential and commercial – has finally begun to find an outlet in the various major schemes now underway. As the region's national and international connections continue to grow we anticipate this having a positive impact in terms of residential property values.”
But with these positive predictions comes a note of caution. Matthew Wright added:
“The residential market continues to be heavily influenced by changing Welsh Government policy across planning, construction and taxation; indeed, more so than any other sector of the property market. Measures such as the ‘Help to Buy' scheme have bolstered demand however the devolution of minor taxes to Wales has brought changes to stamp duty and, potentially, a new tax on vacant land.”
Welsh Government recently announced that from April 2018, the existing Stamp Duty Land Tax will be replaced in Wales by a Land Transaction Tax, which introduces new price thresholds for residential sales. The new regime is aiming for purchasers of houses up to £400,000 to pay the same or less than under the current scheme, with properties above this level incurring higher tax.
Welsh Government has announced its intention to introduce a tax on vacant land, similar to the Republic of Ireland model, to ‘… prevent the practice of land banking and land not being developed within the expected timescales'. Little detail has been provided as to how this will operate and how penalising the under-use of land will improve the viability of marginal sites.
Download JLL's report here