Conflicted about buying a house

Speaking from experience - I'd say think very carefully about not stretching yourselves at least a bit now. As others have pointed out, unless you're both looking at a complete change including jobs etc, the move to Wales would come with increased travel costs, as well as of course a much increased commute time. Have a think about, for example, how long the commute would really take you done in rush hours, and what impact a bridge closure would have on you? I presume that both of you currently have a good social circle in Bristol - how isolated might a move right away make you feel?

My suggestion would be to take a deep breath, and look at adding a conservative mortgage to the amount you have saved. Maybe search for properties up to about 180k or perhaps a little more even? That leaves you with very manageable mortgage payments (especially between 2) and thus you should be able to set aside enough to make improvements to a property and to OP the mortgage too - if you both agree to knuckle down on overpaying you could have that amount gone inside 10 years easily enough.

Your post just gives the feeling that the Wales thing is a compromise - and sometimes you do have to be a bit brave. Just be confident that you can afford the mortgage payments comfortably - don't over stretch. A Rightmove Map search with relevant filters set might give you some insight into which areas are worth focusing on - maybe look at a radius a sensible distance outside central Bristol if you don't want to go very central, or don't feel you can justify the increase in prices that really central means?