The average house price in Wales has risen by 4% year on year to £238,483, according to the latest figures from the Principality Building Society.

But the regional picture is more mixed, as 13 local authority areas have seen an annual increase in prices while nine experienced a drop.

The Principality said much of the market strength to date is currently “centred” in south Wales, with Bridgend, Blaenau Gwent and Caerphilly reaching “fresh record prices” between January and March this year.

The number of sales has also increased, with transactions in the first three months of 2025 up by a fifth compared to the same period last year.

It is this momentum that Gemma Redmond and her partner Ellis Price hope will help them sell his Cardiff flat as they plan to buy their first house together.

“We’ve got a dog and a cat in a one-bedroom flat, so it’s a bit cramped,” said Ms Redmond, who works as a veterinary nurse.

The couple have just put the flat on the market, and have already lost one house they were interested in.

“We were outbid by another buyer, which is sadly the lay of the land at the moment,” said Mr Price.

“Things are not staying on the market and it’s difficult to view them in good time” he added.

The recent reduction in the Bank of England base interest rate and the expectation of further rates cuts later in the year has made mortgages a bit cheaper.

“I’m a bit apprehensive because it’s my first time buying and this is our first joint mortgage,” said Ms Redmond, “but it’s a good time to get a mortgage.”

Estate agent Sean Lynch from the Harry Harper Agency in Cardiff said the housing market was “busy” at all levels.

“As long as properties are priced appropriately and they’re staged well, that’s encouraging the enquiries,” he said.

“With the base rate dropping again, that’s given a bit of a boost to buyers.”

But “affordability challenges remain”, according to the Principality’s analysis.

This is despite transactions reaching 10,000 in the first three months of 2025 – which suggests “buyer confidence is still growing”.

Iain Mansfield, chief financial officer for the Principality, said the figures showed a “positive start” to the year but he struck “a note of caution” as cost of living issues like rising utility and energy bills continue to affect household budgets.

He added there continued to be challenges across some of the coastal and rural areas of Wales which he said could be partly influenced by “some of the interventions made by government” over second homes.

Some local authorities in tourism hot-spots have increased council tax for second homes, while the Welsh government recently increased the land transaction tax for additional properties.

But looking at “the totality of Wales, it’s a positive message” said Mr Mansfield after the last three months of 2024 and the first quarter of 2025 showed growth in the number of property sales.

“We’re expecting further reductions in the Bank of England base rate [and] that affordability will continue to ease for mortgage customers, building on this positive trend.”