01 July 2008

NI House Prices Still Falling

A fresh housing report has yet again underlined falling house prices in Northern Ireland.

The Province has continued to see big declines in property values during the second quarter.

Prices fell by 9.0% from the previous quarter in April-June, leaving them 18.6% lower than at this time last year, with the average price of a typical property in Northern Ireland now at £183,476, well below the levels seen during all of 2007 but still slightly higher than the average price in the fourth quarter of 2006.

By way of background, the Nationwide report said that Northern Ireland actually saw a cumulative increase in house prices of almost 80% in 2006-7 and these increases made mortgage affordability particularly stretched in the Province, leaving the housing market much more vulnerable to the shocks that have affected the wider economy.

At the end of 2007, the average house price in Northern Ireland still stood at over 7.5 times a typical first-time buyer's income, compared with 5.4 times for the UK as a whole.

Despite having among the lowest average incomes among UK regions, Northern Ireland had some of the highest house prices at the peak of the boom last year.

As a result, the current correction in house prices is proving to be more severe than elsewhere.

Commenting on the overall UK figures Fionnuala Earley, Nationwide's Chief Economist, said: "The pace of house price falls slowed significantly in June. House prices fell by 0.9% during the month, less than half of the rate of the 2.5% fall recorded in May.

"Prices in June are now 6.3% lower than this time last year and have fallen 7.3% from their peak last October.

"The price of a typical house is now £172,415. This is over £13,500 less than it would have cost at the top of the market and over £11,500 less than this time last year.

"However, the strength of house price growth up until last year means that prices are still 4% higher than two years ago and 9% higher than three years ago."

Meanwhile, as an added headache for those selling properties, from today, people wanting to sell their homes in Northern Ireland must now have an Energy Performance Certificate for the property.

While it is now compulsory for home owners to have a certificate before selling, it is understood that the Department will take a lenient view for the first few weeks until the new scheme settles in.

Finance Minister Nigel Dodds has given the new scheme his blessing and said it allows would-be purchasers to see how energy efficient the home is.

"It's an incentive for people to do work and improve the energy consumption in their properties because it makes it much more marketable," he said.

"I don't think it is a tax. What this is doing is providing very relevant information to perspective purchasers of properties.

"How energy efficient is this property that I'm buying? And in this day and age when energy costs are so important, it's absolutely vital information for people to have."

Surveyors have already been out inspecting many of the homes currently for sale, a necessary requirement to produce one of the new Energy Performance Certificates.

(BMcC)