SINCE the early noughties, the Northern Ireland housing market has been the subject of much discussion and analysis, with the sector going through a period of unprecedented fluctuation particularly between 2006 and 2012.
In the early and mid-2000s, both national and international economic issues resulted in an exponential rise followed by the largest fall in property prices within any global market. The unprecedented property boom of the early 2000s was then counteracted by a significant drop in house prices during the ‘credit crunch’. But since 2013 we’ve seen steady progress and a rebalancing of the housing market.
The quarterly Northern Ireland House Price Index provides the most current analysis of the market, looking specifically at data from the quarter just finished. This data comes from the start of the housing chain, the estate agents, providing a leading indicator. This has enabled us to have a more detailed insight into the trajectory, affordability and sustainably of the market over the last two years and to assess the medium to long term outlook.
Despite political and economic upheaval at a local and national level, Northern Ireland’s housing market has remained resilient, with prices generally on an upward curve since the start of 2016.
But the difference between now and ten years ago is that the growth is based on affordability, sustainability and a robust economic foundation. In the first quarter of 2018 we saw an annual house price increase of 4 per cent and a rise of 3.1 per cent compared with the final quarter of last year.
The consumer squeeze that had been building throughout 2017 eased, with inflation falling against the backdrop of rising wages which boosted spending power for local households.
In Northern Ireland residual incomes are lower than other parts of the UK, which reflects the need to maintain steady, sustainable housing growth. There are signs that increased demand and a shortage of supply has seen an overheating in London and Dublin markets, and therefore the reestablishment of a regional government is essential to ensure that there is a consistent flow of new properties on to the market in Northern Ireland.
Two years ago, there were supply and demand issues in the local market, with the need to strike a balance between the availability of housing and increasing numbers of first time buyers and those wishing to move to a bigger home. With the number of first time buyers currently at its highest level for a decade, this imbalance still hasn’t been fully addressed and it is an area where a collaborative approach between the public and private sector is needed.
Over the last two years there has been an overall house price increase, across all Northern Ireland regions bar one, with the average cost increasing in that period by 11.7 per cent (from £146,472 to £163,621).
Growth within the regions generally appears to be clustered, with properties in areas of close proximity generally having similar levels of growth in average prices. East Belfast is the exception, and has experienced a much larger growth rate of 13 per cent (£22,515) than the rest of the city.
The largest overall increase has been seen in Lisburn at 26.4 per cent, closely followed by Derry/Strabane at 24 per cent, despite a 6.2 per cent decrease in from 2017, and East Antrim at 23.3 per cent.
The only region in Northern Ireland to witness a marked decline in average house prices over the last two years was Coleraine, Limavady & the North Coast. Average prices in this area have declined by 7.4 per cent from £147,108 in the first quarter of 2016 to £136,270 in 2017 quarter four, though it did however recover at the start of this year, noting an average house price of £156,365 during this time.
In the first quarter of this year Northern Ireland led house price growth across the UK with a 7.9 per cent increase on 2017. Unemployment is now at a 10-year low, and with inflation falling and wages starting to rise, property prices here remain more affordable than many other regions.
But political and economic uncertainties remain, and clarity around Brexit, as well as a re-established Stormont, would enable us to maintain long term sustainable growth in the sector.
With continued confidence among estate agents and the wider industry, the outlook is positive for our housing market for the remainder of 2018 and beyond. Improved housing supply and prudent lending will be key elements in ensuring this growth is sustainable in the longer term.
Source: Irish News