Housing Market 'Taking Hit In Cuts'

A newly published survey has predicted that cuts in the Northern Ireland public sector will have a major impact on the future housing market.

With the NI housing market showing marginal recent signs of improvement and expectations of slightly increased prices over the summer, the Royal Institute of Chartered Surveyors (RICS) has warned that high unemployment levels and increasing pressure on domestic budgets would add to the difficulties facing sellers, according to a news report in the Belfast Telegraph.

"There remain big sectoral and geographical variations in the local market, and the likelihood is for this to continue during the remainder of the year," said RICS spokesman Tom McClelland.

"On the whole, the scale of public spending cuts that are to come will impact on Northern Ireland significantly, creating a difficult environment for the housing market.

"Unemployment will remain high for some time and increasing pressures on household budgets, such as water-charging and rises in interest rates, will also inevitably come. That said, we foresee a prolonged period of largely flat average house prices rather than a further significant correction in average prices."

The Ulster Bank-sponsored survey said there was a marginal improvement in most housing market indicators last month. Price balance had improved slightly and there was an indication that the number of inquiries from potential buyers had increased. However transaction activity remained subdued.

With nearly three-quarters of respondents reporting prices as flat, Northern Ireland continued to lag behind the rest of the UK.

Derek Wilson, Head of Lending Products at Ulster Bank, said: "The expected headwinds will bring challenges for the housing market, but a range of indicators are pointing to evidence of increasing stabilisation.

"This is leading to an expectation that pent-up demand from those who have been putting off a home purchase will start to be realised," he said.

(NS/GK)