Live overlooking South Wales town or lower down (7)
I believe the answer is:
beneath
'lower down' is the definition.
(beneath means below or lower down)
'live overlooking south wales town' is the wordplay.
'live' becomes 'be' (synonyms).
'overlooking' is a charade indicator (letters next to each other) (down clues only).
'south wales town' becomes 'Neath' (Welsh town).
'be'+'neath'='BENEATH'
'or' is the link.
(Other definitions for beneath that I've seen before include "Directly under" , "in a lower position" , "Unbefitting" , "At a lower level (than)" , "At a lower place" .)