A dramatic fall in second home and holiday let sales in Wales’ most picturesque regions is laying bare the unintended consequences of government intervention in the housing market.
New figures released by the Welsh Revenue Authority (WRA) reveal a significant slump in higher-rate residential transactions—typically second homes, holiday lets, or buy-to-let purchases—across tourism-reliant counties and national parks, including Gwynedd, Anglesey, Eryri (Snowdonia), and Pembrokeshire.
For years, national and local authorities have sought to curb the rise of second homes, citing pressures on housing supply and local affordability. Measures have included eye-watering council tax premiums on non-primary residences, tighter regulations on what qualifies as a holiday let, and—most notably in Gwynedd—a controversial Article 4 direction requiring planning permission to convert homes into holiday accommodation.
While these policies were hailed by housing campaigners, the tourism industry and some economists are now warning of deeper knock-on effects that stretch far beyond real estate.
“This is what happens when governments try to micromanage the housing market,” said a local tourism operator in Aberdyfi, a town where nearly half the properties are second homes. “Now not only are people not buying, but fewer are visiting, and locals are still struggling to find affordable homes. Everyone loses.”
The data paints a stark picture. Gwynedd, once the poster child for second home ownership with nearly 40% of residential sales falling into the higher-rate category, has seen that figure tumble to 27% in 2024–25. Anglesey saw an even sharper fall—from 34% to 27% in just one year. The trend is mirrored in Eryri National Park (down to 28%) and Pembrokeshire Coast (down to 39%).
The Welsh Government and councils like Cyngor Gwynedd have defended the policies, saying they are necessary to “rebalance” communities and give local people a fair shot at staying in their hometowns. But critics argue that rather than building new homes or improving infrastructure, officials are choking the very market forces that sustain local economies.
The Tories have seized on the data to renew calls for a construction-led approach. “Taxing homes out of existence is not a solution,” said a party spokesperson. “We need to build, not block.”
Compounding the issue is the data’s indication that while standard residential sales across Wales surged 23% year-on-year from January to March 2025, higher-rate transactions rose by just 8%, with some areas even experiencing declines.
Analysts at the WRA have noted that Anglesey’s figures, in particular, reflect not just a drop in high-rate purchases but a surge in standard residential sales—suggesting would-be second home buyers are simply staying away. And with them go tourism pounds, seasonal jobs, and demand for local services.
In trying to “solve” the second home problem, policymakers may have created a bigger one: a rural housing market increasingly unattractive to investors, a tourism sector losing lifeblood, and communities still facing the very affordability issues these policies were meant to fix.
As Wales continues to navigate the delicate balance between preserving community character and supporting economic vitality, this latest data offers a sobering reminder—well-intentioned interference often comes at a price.