Ceredigion is the least affordable county in all of the UK for first-time buyers to get on the property ladder, according to new research.
Skipton Group’s Home Affordability Index Report has revealed that six local authority areas in Wales are in the 10 least affordable areas of Great Britain for potential first-time buyers.
Ceredigion takes the bottom spot as the least affordable local authority area.
Here only 2.7 per cent of potential first-time buyers can afford the average first-time buyer home.
The remaining five Welsh local authority areas are Powys (2.7 per cent), Pembrokeshire (2.9 per cent), Cardiff (3.0 per cent), Vale of Glamorgan (3.1 per cent), and Monmouthshire (3.3 per cent).
This chronic lack of affordability across Wales is the result of consistently low first-time buyer incomes; for example, Ceredigion has one of the lowest median incomes in Great Britain.
While house prices across Wales are lower than the average in Great Britain, areas like Ceredigion and Powys are relatively high for Wales, creating particularly difficult conditions for those dreaming of getting the keys to their first home in these areas.
In contrast, Scotland dominates the most affordable areas for potential first-time buyers in Great Britain with Aberdeen City taking the top spot. Even though it’s the most affordable, still only 30 in 100 potential first-time buyers in Aberdeen City can secure that first step onto the property ladder. Across Great Britain as a whole, almost 90% of potential first-time buyers cannot afford to get onto the property ladder without additional financial support.
Stuart Haire, Skipton Group CEO, said: “People might expect London and the Southeast to dominate the least affordable areas for first-time buyers looking to get onto the property ladder in Great Britain, so it’s shocking to see Wales feature so heavily.
“The first step onto the property ladder remains by far the hardest but for Welsh first-time buyers, it must feel impossible. Our new data shows just how stark their affordability challenge is, yet it is further exacerbated by the absence of any land transaction tax relief for first-time buyers in Wales.
“But that doesn’t mean it’s much easier for potential first-time buyers in Scotland and England. Across Great Britain, almost 90% of potential first-time buyers cannot afford to buy their own home in their local area without getting any additional help.
“At Skipton, we see first-time buyers doing all they can to be in the best position to afford a home of their own: working hard, saving what they can, and making use of government initiatives designed to help them into their own homes. Despite these endeavours, monumental barriers stand in their way – barriers that can and should be removed.”
The latest housing market data from the Principality Building Society has revealed that prices in west Wales have tumbled, with Gwynedd seeing a 12.4 per cent drop in house prices in 2024, with the average home now costing £221,330, compared to £252,744 in December 2023.
Ceredigion saw a 2.8 per cent drop, with the average home being £10,000 cheaper in 2024 than the year before, but prices still remain higher than the national average.
The average Ceredigion home in December 2024 cost £261,115, with the Welsh average being £233,194.
It’s a similar story in Pembrokeshire, with an annual drop of 8.9 per cent, with the average home costing £240,674 in December 2024, compared to £264,305 in 2023.
Powys however saw a rise in house prices with the average home now costing £258,399.
Carmarthenshire prices also leapt in 2024, from £208,460 to £227,702.
Speaking about the Q4 House Price Index (October to December), Iain Mansfield, Chief Financial Officer at Principality Building Society, said: “The housing market in Wales has demonstrated resilience against a challenging environment throughout 2024, with Principality's House Price Index showing clear signs of renewed confidence.
“A more stable housing market is welcome news for buyers and speaks to the strong demand for housing, driven by buyers looking to enter or move within the market, despite the challenging landscape of the last few years.
“This demand is evident in the approximately 12,800 transactions that were recorded in Wales in the fourth quarter, which represents an 18% increase when compared to the third quarter. It is also a 28% rise year-on-year – the highest level observed since late 2021. This reflects the continued recovery in transactions that began in the second quarter and indicates that despite continued cost-of-living pressures, and the elevated rate environment, demand continues to grow.
“Low supply of housing is a real challenge for buyers and there is also more that can be done to support buyers when it comes to the matter of affordability- especially for those hoping to get onto the housing ladder for the first time. Principality conducted a recent survey which revealed that 75% of our Member respondents say that house prices in the UK are ‘too high’, and a further 74% of respondents agreeing it is ‘much harder’ for young people to get on the housing ladder.
“Looking ahead, the UK Government have stated they are committed to extensive planning reforms in order to restore local housing targets – with a particular focus on increasing social and affordable housing. This, coupled with the additional help for first time buyers in Wales, where housing matters are devolved, announced at the recent Welsh Government Budget, signals a positive future outlook.
“There is undoubtedly more to be done to ease affordability, and as a leading funder that works with the majority of housing associations in Wales, Principality has a vested interest in being part of the solution.”
What is being done
Ceredigion County Council has taken action in trying to make taking the first steps onto the housing ladder more accessible.
A council spokesperson said: “Ceredigion County Council are acutely aware of the housing pressures in the county and expend substantial resources in trying to ameliorate this issue.
“The planning service have a target to achieve 20% of all housing to be affordable county wide and have exceeded this target with 37% of housing permitted and 33% of all housing built since Local Development Plan adoption being affordable, Discount for Sale or Intermediate Rental properties.
“In the past year, the Council has introduced the Community Housing Scheme, a shared equity product, to support people to get on the housing ladder. As an authority prioritizing affordable housing delivery is a central pillar of our Corporate Strategy, Local Wellbeing Plan, Housing Strategy and Local Development Plan. We continue to strive to find ways to maximize housing opportunities county wide.”
Article 4 in Gwynedd faced opposition but was introduced in September 2024.
In Eryri National Park and Gwynedd, planning permission will be required to change the use of a residential property into a short-term holiday let or second home.
Cyngor Gwynedd, says its aim was to "increase the availability of high-quality, affordable homes for local people".
When introducing the new rules, Cllr Dafydd Meurig said: "Cyngor Gwynedd wants to ensure local people able to access suitable and affordable housing locally – that is key to securing the future of our communities.
"Unfortunately, research shows that a significant proportion of people in Gwynedd are priced out of the housing market and that is more evident in communities with higher numbers of holiday homes.
"It is therefore inevitable that the significant number of houses being used as second homes and short-term holiday accommodation is affecting the ability of the people of Gwynedd to access homes in their communities.
"By introducing an Article 4 Direction, the council will have a new tool to try to control the impact of second homes and holiday accommodation. The change will require owners to submit a planning application for changing the use of residential properties into second homes or short-term holiday accommodation.
"Following this decision, Gwynedd will become the first Planning Authority to use these new planning powers introduced by the Government.
"Detailed work has been carried out over the past year to set out the case for the change to be made and we are very grateful to everyone who took part during the public engagement period.”
Cllr Dafydd Meurig said: "Cyngor Gwynedd wants to ensure local people able to access suitable and affordable housing locally – that is key to securing the future of our communities.
"Unfortunately, research shows that a significant proportion of people in Gwynedd are priced out of the housing market and that is more evident in communities with higher numbers of holiday homes.
"It is therefore inevitable that the significant number of houses being used as second homes and short-term holiday accommodation is affecting the ability of the people of Gwynedd to access homes in their communities.
"By introducing an Article 4 Direction, the council will have a new tool to try to control the impact of second homes and holiday accommodation. The change will require owners to submit a planning application for changing the use of residential properties into second homes or short-term holiday accommodation.
"Following this decision, Gwynedd will become the first Planning Authority to use these new planning powers introduced by the Government.
"Detailed work has been carried out over the past year to set out the case for the change to be made and we are very grateful to everyone who took part during the public engagement period.”
Article 4 is not without its objectors however.
A High Court judge refused the anti-Article 4 campaigners’ request for a judicial review of the decision in November.
Despite the High Court setback, campaigners against this ruling have not given up the fight.
On the group’s social media page, called People of Gwynedd Against Article 4, a spokesperson said their legal team “have been considering the merits of an “appeal” of the judge’s decision to refuse permission for the Judicial Review to be brought by the Claimant.
“We have been using the term “appeal” as it is a widely understood term, however it is not technically an appeal, it is a renewal of the application for permission, which essentially asks the court to re-consider the application for permission, upon receipt of further submissions by the barrister.
“The claimant’s legal team have advised that there is merit in renewing the application, so that request has now been lodged with the court."
In Pembrokeshire, councillors decided in October to cut the extra council tax charge on second homes to 150%, just six months after a 200% rate was introduced.
Many councillors have voiced their concerns over the financial impact of the cut, as it could add a further £2.6m in cost pressures.
The cut has also been criticised by Unison, who described it as ‘deeply disappointing’, adding it ‘beggars belief’ that council services and a redundancy scheme for staff are being cut to subsidise second home owners.
However, the owners of empty properties face paying a higher premium.
During the October decision to lower the second homes rate, the rate for empty properties was also discussed, with a proposal by Cllr Alan Dennison to change the empty property premium to 300 per cent after two years, a matter that was deferred to the December meeting of full council.
A report for members calculated this change would bring an extra £663,000 to council coffers in the next financial year.
The report added: “The long-term empty properties council tax premium contributed £1.67m to the elements of the council’s budget relating to affordable housing and enhancing the sustainability of local communities during 2024-25. Current projections are for £1.65m of this to be collected during 2024-25.
“Any reduction in the long-term empty properties council tax premium or the level used to contribute to elements of the council’s budget relating to affordable housing and enhancing the sustainability of local communities would result in a reduction in income and an increase in the pressures and funding gap for 2025-26.”