House prices remain in turmoil

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HOUSE prices in Northern Ireland have dropped by 13 per cent in the past year according to a new survey based on official statistics.

Welcomed yesterday by Finance Minister Sammy Wilson, the Northern Ireland Residential Property Price Index is designed to provide a benchmark for the performance of the residential property market, using information on all sales from Land & Property Services and Her Majesty’s Revenue and Customs (HMRC) data sources.

To be published on a quarterly basis, the inaugural index offered little joy yesterday revealing that although sales in the first part of the year have risen slightly, property prices as a whole are now seven per cent lower than in the first quarter of 2005 and around half of the peak value of the market in the third quarter of 2007.

“Given the current difficult economic climate this new Residential Property Price Index will provide valuable information on a regular basis about our local property market,” said Mr Wilson.

“These statistics include analysis of the first three months of this year and show that residential prices have continued to fall, with an overall seven per cent drop in the first quarter of 2012.

“The index also clearly shows that the rapid house price inflation which occurred between 2005 and 2007, when property prices nearly doubled, has now been rebalanced with house prices typically returning to pre-2005 levels. Whilst I appreciate the concern of some who purchased at the peak of the market, it is good news now for first-time purchasers and those wishing to move up in a much more affordable housing market in Northern Ireland.”

The NI RPPI includes sales of all properties sold at auction for cash and through estate agents but excludes the sale of Housing Executive stock to tenants as those involve discounted prices that would distort the overall view.

Officials at Land & Property Services yesterday defended the inclusion of auction prices – which tend to be distressed sales involving mostly repossessed properties – arguing that they reflect the reality of the market at present.

The index measures change in the price of residential property sold in Northern Ireland, and uses stamp duty information on residential property sales recorded by Her Majesty’s Revenue & Customs.

The launch of the new index comes a day after figures from the UK Office of National Statistics reported a 10.7 per cent drop in prices in the province. It also joins other surveys including the well-regarded University of Ulster House Price Index and the RICS Housing Market Survey from the Royal Institution of Chartered Surveyors.

The 13 per cent drop in prices was measured over the year to the end of March 2012, but the index also reflected other reports about increased activity in the market as it showed around 2,600 sales in the first quarter – a nine per cent increase.