House prices drop in Gwynedd thanks to council crackdown on second homes

Gwynedd has seen a significant drop in house prices following the local authority’s robust measures targeting second homes and short-term holiday lets over the last couple of years. Although it isn’t all doom and gloom for locals though, since new data suggests this downturn has delivered relief for residents struggling to secure affordable housing.

Council action: premiums and planning controls

In April 2023 – following a landmark decision by the Welsh government, empowering councils to raise premiums up to 300% and close loopholes for holiday-let self-employed business rates –  Cyngor Gwynedd became one of the first local councils to elevate premiums, increasing its council tax premium for second homes from 100% to 150%, and raising revenue to tackle local homelessness. In September 2024, the council went a step further, introducing an Article 4 direction, requiring planning permission to convert properties into holiday lets or second homes in a move widely seen as pivotal in reshaping the local property market.

House-price decline

So, what was the impact on house prices? 

Principality Building Society figures for Q4 2024 showed a sharp 12.4 % drop in average house prices across Gwynedd, compared to only a 0.4 % decline across Wales overall. That placed the new average house price at around £209,374, down from approximately £264,193 a year earlier. 

Confirming this trend, the Office for National Statistics (ONS) reported a 5.2 % annual fall to £193,000 by December 2024, compared to £203,000 in December 2023. Notably, first-time buyers saw a 4.7 % reduction, from £175,000 to £167,000 over the same period. 

In December 2024, average house prices in Gwynedd by property type were:

• Detached: £296,000 (-6.5 %)

• Semi-detached: £198,000

• Terraced: £152,000

• Flats/maisonettes: £114,000 

Second-home numbers are down too

Given the new financial pressures for second-home owners, unsurprisingly, the number of second homes in Gwynedd has fallen markedly. Recent data shows a 7 % drop from 2024 to 2025. Gwynedd now has 4,435 second homes compared to 4,758 the previous year.

Locally, holiday hotspots like Abersoch and Aberdaron continue to have high proportions – 28% of homes there are second homes – but the overall downward shift in the area is clear.

What this means for local people

For first-time buyers in particular the downturn offers newfound confidence and a chance to buy back into the community having been priced out by investors and holiday homes previously. 

Meanwhile, the council has reallocated revenue from increased premiums to its Empty Homes Grant Scheme. The £20,000 grants incentivise renovation of long vacant or former second homes. 170 properties have already been repurposed, helping to bolster local housing stock.

A balancing act

However, the decline in local property prices (by as much as 21% when it comes to semi-detached homes) has unsettled some existing homeowners. 

Critics warn of potential economic side effects as holiday homeowners sell up, reducing tourism spending. A community split has emerged: while a number of existing homeowners voice concerns over “devalued assets,” prospective buyers who might finally be able to get a foot on the local property ladder welcome improved affordability, showing that a balance needs to be struck.

Policy prospects and wider trends

In May 2025, the Welsh government closed a loophole that allowed second-home owners to claim small-business tax relief on holiday lets, further tightening the market. Councils now have the authority to impose tourist taxes – £1.25 per adult per night and 75p for campsites – inspired by successful schemes like Edinburgh’s visitor levy, adding another lever to manage the housing landscape. 

More broadly across Wales, second-home numbers continue to fall sharply with predictions of a 9.3 % decline nationwide in 2024-25 as the likes of Pembrokeshire, Cardiff, Anglesey, Conwy, and Ceredigion have followed Gwynedd’s example. The challenge now is balancing affordability with economic vitality. Councils must ensure that tourism-derived revenues don’t dry up and that local businesses remain viable.

Looking forward: cautious optimism

In fewer than two years, Gwynedd’s bold approach to taxing second homes and regulating holiday lets has had a significant impact. 

We have seen substantial house-price reductions and the reversal of the trend in vacant and second-home properties. The effects are most acutely felt in local pockets like Abersoch and Caernarfon, where families once shut out are finding a foothold again.

While some homeowners are concerned, many view the shift as overdue realignment – after all, communities depend on families who live there year-round. Preserving local culture and the Welsh-language is a key driver too, not just economics.

Gwynedd’s plan is already serving as a model for other Welsh councils eyeing similar strategies. As it unfolds, locals and policymakers alike will be watching closely to ensure the balance between community welfare and economic wellbeing holds steady. Clearly, ongoing monitoring is essential to fine-tune policy levers, such as premiums, planning permission, and post-pandemic tourism trends, but with Savills predicting that house prices in Wales will outperform the UK average over the next five years thanks to affordability being less stretched here than elsewhere in the UK, the signs are (cautiously) positive.