There are early indications that Pembrokeshire house prices could be on the wane following news of a 11.6 per cent decline over the last year.

Figures released by the Principality Building Society’s Wales House Price Index for the third quarter of 2023 (July to September) report that house prices have dropped by three per cent, with the average property now being valued at £264,496.

So, too, have house prices dropped in neighbouring Carmarthenshire which has seen a quarterly drop of 3.4 per cent and is down 7 per cent when compared year-on. The average house price in Carmarthenshire currently stands at £216,711.

Ceredigion ,however, remains the only county in West Wales to have recorded an increase during the third quarter of 2.5 per cent. But when compared to this time last year, the average house price is still down by 6.3 per cent. Average house prices in Ceredigion stand at £264,496.

“The downward trend in house prices has continued into the third quarter with economic pressures over recent months, paired with higher interest rates than we’ve become used to, meaning that affordability remains a problem for many buyers,” said Shaun Middleton, Head of Distribution at Principality Building Society.

“This has put pressure on the housing market, which remains subdued when compared to recent years when record average prices across Wales were seen.

“The picture across Wales shows us that more local authorities have been reporting price decreases rather than increases, translating into year-on-year falling house prices. This is a clear indication of the broad-based nature of the market’s retreat over recent months.”

Across Wales, the average price of a home has fallen to £239,378, the first time in a decade that prices have dropped year-on-year and follows three consecutive quarterly falls this year.

With a quarterly drop of 1.1% and an annual drop of 2.6%, the new average house price is now almost £10,000 down from its peak of just over £249,000 in the fourth quarter of 2022.

Principality has confirmed that there were just below 10,000 transactions in Wales in the third quarter which is an increase on the previous two quarters of the year, but still down 20 per cent compared to a year ago.

The slower nature of activity primarily reflects the much higher interest rates over the past year and is being experienced in much of the rest of the UK as well.

Shaun continued: “The Bank of England’s decision to leave base rate unchanged at 5.25% in September, on the back of easing inflationary pressures, has prompted better mortgage deals in recent weeks, although affordability in Wales remains stretched and the overall benefit for consumer confidence may be limited by a growing awareness that interest rates look set to remain higher for longer. This suggests that transactions levels may continue to disappoint for some time.”

Looking at price movements by property type, the different property types are currently between 1 per cent and 4 per cent below their respective levels a year previous.

While all property types have seen pronounced slowdowns, Principality’s report shows that semi-detached properties have shown a degree of resilience – down less than 1 per cent on the year and only 3 per cent below their peak in March 2023.