Welsh housing market sees price growth and strong sales, but development slumps to record lows
Welsh housing market sees price growth and strong sales, but development slumps to record lows
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Wales is outperforming the wider UK housing market in 2025, with stronger house price growth and a surge in sales activity, but a new report from Savills warns that the nation’s development pipeline is weakening sharply.
The findings were unveiled during Hugh James Housing Week 2025, where around 50 industry stakeholders gathered at the law firm’s Cardiff headquarters for the launch of the latest Savills research.
The event, held on the second day of the week-long programme, brought together senior figures from Welsh real estate, government and finance to debate long-term challenges facing the sector.
Savills’ analysis shows that Welsh house prices rose 3.1% in the year to September 2025 and 2.2% in the first nine months of the year. Sales transactions were 12.4% higher than in 2024, supported by gradually falling mortgage rates and improved affordability.
This performance outstrips the UK average, where house prices increased by 2.3% annually and by just 0.5% in the first three quarters of 2025.
The rental market has also shown signs of stabilisation. Rents for new lets increased 3.3% in the year to August, but affordability has improved, with tenants now spending 31.7% of income on rent, down from 34.5% a year earlier.
Despite these encouraging indicators, Savills’ report highlights worsening conditions on the supply side. New home completions have fallen to their lowest level in more than a decade, and housing starts are also at a record low. Planning consents have dropped sharply, down 26% year-on-year, pointing to significant challenges ahead for developers and policy-makers alike.
New completions fell 9% in the year to June 2025, continuing a four-year annualised decline amounting to a 31% drop from peak levels. Planning consents were especially weak: just 648 homes received approval in Q2, the lowest quarterly figure on record and 67% fewer than the same period in 2024. Annualised consents are now less than half of their post-pandemic peak.
“Despite the remarkably resilient market, our analysis shows a downward trend in the delivery of new homes in Wales, with completions, starts and consents all at a record low,” said Dan Hill, Savills Residential Research.
“Progress is being made on replacement Local Development Plans, but we are seeing limited capacity to deliver on Plan targets. Resource, or lack thereof, is and will continue to be a significant issue in the coming years, alongside more localised challenges such as nutrient pollution, with the number of new homes likely to continue to fall based on this evidence.”
The report reveals that Wales’ Help to Buy scheme continues to support new-build sales. Around 9% of new homes completed in the year to March 2025 used the scheme—broadly consistent with recent years, though still well below the 25% peak recorded in 2018.
Emily Williams, Savills Residential Research, said: “The extension of the Help to Buy scheme in Wales in January to September 2026 was good news for first-time buyers and for the sector, helping new homes maintain a competitive advantage over second-hand, therefore aiding viability.
“However, the value cap remains unchanged from 2014, while house prices have increased, limiting the positive impact.”
Williams continued: “Our research points to a positive outlook for price growth and activity in 2026 and over the next five years.
“This should provide a positive environment for housebuilding. But with planning consents at a record low, there needs to be a real focus on bringing land forwards to ensure developers are able to deliver the homes Wales needs.”
Affordable housing delivery has been one of the few bright spots. A provisional 3,660 affordable homes were delivered in the year to March 2025, the highest figure on record and 12% more than the previous year. Yet the Welsh Government remains more than 7,000 homes short of its target to build 20,000 affordable homes by March 2026.
Caroline Jones of Savills Cardiff, who organised the launch event, said: “The research presents a mixed picture of the housing market in Wales. On the one hand it shows impressive resilience, especially considering the political and economic uncertainties this year, while on the other, it highlights the significant challenges we face in terms of delivery – both in the private and affordable sectors.
“We know that the demand for land is particularly strong from both the private and affordable housing developers in Wales. It is crucial that more development opportunities become available not just to deliver much needed housing options, but because of the significant economic impact. Building has such a positive impact on local communities by delivering social value, training and employment opportunities.”
Caroline, Partner at Hugh James, said: “As the Head of Social Housing at Hugh James, it was a delight to collaborate with Savills again as part of Housing Week 2025.
“The Savills report is one of the highlights of Housing Week, where we focus on bringing together the housebuilding sectors for constructive discussions.
“The panel I chaired featured representatives from Welsh Government, the Development Bank of Wales, housing associations and the housebuilding sector.
“The discussion emphasised the importance of unlocking strategic public sector land, ensuring funding mechanisms are more innovative than grant alone, and the need to foster greater collaboration between registered social landlords (RSLs) and housebuilders on larger sites.
“Importantly, we witnessed the start of some key conversations on projects that will make genuine progress towards housebuilding targets. The overriding theme from the event was the need to unlock the planning system with sufficient resource to process applications swiftly, ensuring the delivery of the homes and communities Wales needs.”
O’Flaherty continued: “We find the data in the Savills report very helpful in assisting our clients, and particularly their boards, to make evidence-based strategic development decisions.
“Our clients value our in depth understanding of the challenges they are facing, and the facilitating networks we promote to find solutions.
“The latest report from Savills reveals that new homes completions are at their lowest in a decade, nutrient pollution issues have slowed development and that the Social Housing Grant remains £200M below what Audit Wales identifies as necessary to meet building targets which can seem a gloomy picture.
“However, by facilitating the launch of the report at our Headquarters in Cardiff as part of Hugh James Housing Week 2025, the Savills team were able to shed a light on the predicated improvement of the Welsh sales market over the next 5 years and how they expect it to outperform the UK average.
“Throughout the event we also explored the underlying reasons for the information presented in the ‘Welsh Housing Market and Supply Update’ and heard the initial response to the data from all the interested stakeholders gathered at the event.
“We also explored the various initiatives underway to address existing issues and barriers, highlighting the positive steps already being taken and the momentum needed within the sector to deliver housing across Wales regardless of whether it is for an affordable or private market.”
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