It’s wait and see in the Welsh housing market at the moment. 2026 began with cautious optimism. While demand was still fragile, a gradual fall in mortgage rates meant prices were growing and transactions sat just above the 2017-19 average, giving some confidence that the mainstream market could improve over the year and into 2027. But a sharp rise in mortgage rates as a result of the conflict in the Middle East poses a significant downside risk to this outlook. The impact this has on housing will very much depend on the length and severity of the conflict, but price falls are possible, certainly in the short term. Wales should be insulated compared to other parts of the UK to some extent by stronger housing affordability.  Beyond this, the medium-term outlook for Wales is still positive but relies on interest rates falling over the coming years.

Does the election hold the key for the development industry? Completions rose at the end of last year, possibly buoyed by positivity in Affordable Housing, but remained below newly-calculated housing need figures. Conversely, new planning consents dropped to a record low. The major parties have all floated ideas around planning reform in the run-up to the May elections, and a sharp uptick in consents will be needed if completions are to meet housing need over the next five years.

House prices in Wales rose by 2.6% in the year to March 2026, and by 0.8% in the first quarter, according to Nationwide. Transactions in 2025 were broadly on par with their 2017-19 levels, 4% below over the year, per HMRC. And activity rose in the first two months of 2026, 4% above 2017-19.

But the RICS survey suggests that demand has been quite low in the first three months, sitting some way below supply. This survey provides a reasonable forward indicator for activity and price growth, suggesting the coming months are likely to be slower. This is not uncommon – political events and particularly elections often have a negative impact on demand, with buyers choosing to wait and see what the future tax and regulatory environment looks like before committing to a home purchase. This was true in Wales in the third quarter of last year in the run-up to the Autumn Budget in Westminster and appears to be happening again as we approach the Senedd elections in May.

Conflict in the Middle East risks derailing the positive outlook for Wales. The signs pointed to cautious optimism at the end of 2025 and into the first couple of months of this year; although demand was low, prices were rising and mortgage rates were gradually coming down. On that basis, we forecasted 3% growth across Wales in 2026, and 27.6% over five years.

The conflict has caused mortgage rates to rise by around 100 basis points since January, hampering affordability. The availability of mortgage debt has also reduced, particularly for higher loan-to-value products. The Bank of England has adopted a ‘wait and see’ approach, pausing rate cuts for now. In the medium term, rates are still likely to fall, so we still expect house prices to rise over five years, although there is a heightened downside risk to this outlook. In 2026, there is more likely to be downward pressure on prices and activity, but this is very much dependent on the length and severity of the conflict and its impact on global energy markets.

Second home hotspots are feeling the pressure of higher council tax, with falling prices in many coastal markets. This includes Ceredigion (-4.5%), Carmarthenshire (-2.6%) and Pembrokeshire (-1.9%). House price growth has slowed across most Welsh local authorities in the year to December 2025, with only the Isle of Anglesey seeing growth above 5%, according to the more lagged Land Registry index.

Rental growth has slowed to 1.8% in the year to February, down from 4.5% in the previous year and 12.2% at peak, according to Zoopla. For now, the very high levels of rental growth recorded in Wales over the past five years appear to have subsided, as weaker levels of demand are met with higher supply. Growth has slowed in two thirds of Welsh local authorities over the last six months. Gwynedd was the only local authority to see rental falls (-1.9%) while Denbighshire has seen the strongest growth at 10.4%. 

Completions buoyed by Affordable delivery, but consents at record lows

Annualised new homes completions rose by 8% in the year to December 2025 to c.7,500, according to EPC data, reversing a four-year decline. This brings completions back to their mid-2023 level and is corroborated by Stats Wales completions figures.

Although encouraging, completions remain -16% below the newly-calculated housing need figure of 8,900 for 2025/26. This figure covers newly arising housing need, while the Government estimate that there is also an existing unmet need of 9,400 affordable homes.

Planning consents are at record lows, limiting the pipeline of land on which to develop and threatening future completions. According to the HBF, only 715 homes gained full planning consent in Wales in Q3 2025, bringing annual consents down -43% compared to the previous year. Starts still sit below completions, according to Stats Wales, but have been on a positive trajectory since the start of 2025, with annual growth of 19%.

Affordable housing delivery fell short of target, but rose to record levels in 2025/26. A provisional 4,202 new affordable homes were built in the year to March 2026, 15% up on the previous year. This brought 5-year delivery to 17,145, 22% higher than the five years to March 2021 despite very challenging conditions for development.

Use of the Help to Buy Scheme remains more limited, with fixed value caps limiting the number of new homes eligible under the scheme. Use of the scheme has plateaued at around 8% of new home completions in the last year. Build cost inflation in excess of house price growth, alongside a higher cost of debt, have hampered development on viability grounds. That means it is challenging in some markets for developers to build houses at a low enough cost to fit within the scheme’s value caps. Sales under the scheme are therefore concentrated very close to the value cap. A regional approach to value caps or an adjustment in line with inflation may help promote more use of the scheme.

Senedd Election: Housing Commitments

All parties are focused on increasing housing supply, with Labour setting the largest overall target at 100,000 homes over 10 years. Apart from the Conservatives, who aim to deliver 40,000 homes by 2030, the other parties have not set out explicit targets for overall delivery, instead focusing on affordable housing targets. The Greens have set the largest affordable housing target of 60,000 affordable homes in the next ten years. Meanwhile, Plaid Cymru aim to deliver 20,000 social homes by 2030 and Labour are aiming for 40,000 warm, low carbon homes in the next ten years. Reform did not specify any specific housing target.

The need for planning reform is widely agreed upon, while opinions on Help to Buy vary. Plaid Cymru, Labour and Reform all mention measures for planning reform, while the Conservatives suggest incentivising local authorities to make faster decisions. Both Labour and the Conservatives want to expand Help to Buy, whereas Reform want to end it and replace it with more targeted incentives.

Polls suggest Plaid Cymru will win the most seats on the 7th May but fall short of a majority, with Reform close behind. If this were the case, depending on how many seats short they were, Plaid Cymru could declare a minority government or possibly from a coalition with parties close on policy, such as the Greens, Labour or Liberal Democrats.

Labour

• Deliver 100,000 homes over next ten years, including a minimum of 40,000 warm, low carbon homes for rent in the social sector.
• Planning reform via a new entity - the National Housing Taskforce.
• Energy efficient homes - all new homes to include renewable energy generation as standard, support energy efficiency upgrades to more than 100,000 homes over the next Senedd term.
• Expand Help to Buy beyond new-build homes.
• Introduce vacant land tax to prevent land-banking and encourage development.
• Guarantor scheme for private renters.

Plaid Cymru

• Deliver 20,000 new social homes by 2030
• Unnos – establish a new national development body and social housing enabler.
• Enhance rental protections – similar to Renters’ Rights Act in England, an end to no fault evictions, a ban on rental bidding and rent increases limited to wage growth, CPI or other benchmark tbc.
• Planning reform - reduce complexity, provide firmer guarantees on timelines and extend permitted development rights.
• New National Development Framework – focus on a clear and simple spatial strategy which can spend public funds more efficiently.

Reform

• Enforce the Community Infrastructure levy (CIL) in all local authorities.
• Planning reform - impose clear time limits on planning decisions, limit repeat consultations, expedite decision-making, strengthen the presumption in favour where supply is inadequate and require every town to publish a strategic plan.
• End Help to Buy in September 2026 and replace with targeted incentives.
• Repeal certain sustainability requirements that increase housebuilding costs.
• Introduce a 10-year residency requirement for social housing

Greens

• Deliver 60,000 affordable homes  in next 10 years, with the majority as social housing; freeze rents for a year, followed by rent controls; and require all new homes to meet low- or net-zero carbon standards.

Conservatives

• Build 40,000 new homes by 2030;  expand Help to Buy to all FTBs; scrap LTT on primary residences; scrap Wales-wide Nitrate Vulnerable Zone adopting a targeted catchment approach instead; and incentivise local authorities to make timely planning decisions.

Liberal Democrats

• Build 30,000 social homes; improve energy efficiency of the housing stock with a ten-year emergency upgrade programme; and end the leasehold tenure.