How will the cost of living crisis affect house prices in Wales?

Posted on: 31st October 2022 | Filled under: Property Market News
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The increase in the cost of living is likely to cause a slump in the property market due to soaring inflation and a squeeze in surplus funds for people.  This could be particularly problematic for first-time buyers seeking mortgages.

Historically the areas that have had the sharpest increases in prices have often been the same areas that are affected by price drops when the housing market cools.

A rise in living costs have become a significant barrier to buying a home, with seven out of 10 (72%) prospective first-time buyers impacted by the ongoing crisis, according to new research.

Rising energy bills have had the biggest impact on cost of living, as well as transportation costs including fuel going up and food bills also increasing. Potential buyers who may have been putting savings towards a new house, may now have very little to contribute to their deposits. 

First time buyers are impacted on all fronts with much higher borrowing costs than a few months ago, typically in January 2022 interest on a FTB mortgage was approx 2% at their cheapest and now the average FTB interest on high loan to value mortgages being 6% approx. This is set to rise yet again after Christmas. 

Mortgage rates have rocketed over the past few weeks, mainly due to the uncertainty that the government’s mini budget has caused.

Currently there are no fixed rate high loan to value mortgages below 5%.

Some examples of 2 year fixed mortgage rates in October 2022;

  • Nationwide: 5.99%
  • Halifax: 5.95%
  • Natwest: 6.54%
  • Santander: 6.64%

Higher cost of living means lower disposable income and potentially lower number of buyers. High inflation rates mean higher mortgage rates, which could  put people off buying or make it impossible for some. Although the pinch won’t be felt for higher income earners immediately, the cost of living will impact everyone as a whole.

Suggested reads:


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South Wales Residential Market Update – March 2024
The Bank Of England UK
Mid-March 2024 Mortgage Market Update
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Property Auction Sales Collapse

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