Recovery In NI Housing Market To Be 'Slow'

The Northern Ireland housing market is demonstrating erratic and uneven behaviour, according to the latest survey of house prices.

The latest University of Ulster Quarterly House Price Index produced in partnership with Bank of Ireland and the Northern Ireland Housing Executive, covered the second quarter of 2010.

The survey showed that over the previous year there had been an annual weighted rate of price growth of 2.4% but compared with the first quarter of the year the overall average house price actually showed a weighted decline of 2.5%.

According to the authors of the report Professor Alastair Adair, Professor Stanley McGreal and Dr David McIlhatton: “The findings of the current survey highlight the erratic and uneven behaviour of the current housing market.

“On the positive side the small rate of annual price growth and the higher volume of transactions are welcomed signs. However, the weaker price performance during the spring quarter suggests that recovery of the housing market is fragile."

The price statistics are based on a sample of 1,009 transactions in the second quarter of 2010 – appreciably larger than that for the first quarter of the year, which suggests a pick-up in transaction volume during a traditionally active quarter for the housing market.

The survey put the overall average price of a house in Northern Ireland for the second quarter of 2010 at £163,459. The report uses a weighted index to even out fluctuations in the sample composition. While the simple average price increase is 2.9%, the weighted increase over the year in this survey is 2.4%.

The economist Alan Bridle, Head of Economics and Research at Bank of Ireland Northern Ireland, said: “While recent evidence may indicate that average prices have returned to a more sustainable level, the impact on the housing market of impending spending cuts and budgetary restraints in Northern Ireland suggests the price risks are still to the downside. There is now a realism that a recovery to pre-crisis levels will only occur over an extended period of years.

“The sluggish trends in the house-buying market continue to mirror developments in the Private Rental Sector, which has experienced a rapid expansion in supply and choice over recent years. The ready availability of property to let has resulted in large part, in a tenants’ market with considerable choice and bargaining power and I would not anticipate a material shift in sentiment as we move towards 2011."

The survey indicated that the market is becoming increasingly affordable, with 61% of properties selling at or below £150,000.

The Housing Executive’s Head of Research, Joe Frey commented:“The latest analysis confirms our view that the housing market will remain flat for some time to come. An additional less obvious concern, however, is the impact of the new Government’s proposals for restricting Housing Benefit. These could have a very detrimental effect on both tenants’ ability to afford to live in the private rented sector and landlords’ ability to charge viable rents.”

The new build sector represents a smaller proportion of sales this quarter at 26%, suggesting that the re-sale market has become more active.

(GK)