House prices fell by 13% last year, official statistics revealed.
Many homeowners who bought at the height of the boom in 2007 are now trapped in negative equity, one expert said.
University of Ulster Professor Paddy Gray warned: “It is retaining people in areas they cannot get out of because they cannot sell their properties.”
Between quarter three (July to September) and quarter four (October to December) last year residential property prices fell by 3%, the Northern Ireland Statistics and Research Agency (NISRA) said.
The agency said 3,693 residential properties were sold in Northern Ireland between October and December last year. This was an increase of a fifth on the same period the previous year, the highest number recorded since the fourth quarter of 2007.
Professor Gray, from the Built Environment Research Institute at the University, added: “Some people who have to move are renting out the property instead of selling it.
“Some people have taken out high mortgages at the time of the boom and are finding it difficult to make those repayments.”
He said house prices were correcting.
“There were massive increases way above people’s means, now we are finding a return to 2005 levels but that does not help people who took out the mortgages and bought in that time when it was a frenzy,” he said.
Apartment prices, however, rose by 4% between October and December last year. The price of detached homes dropped 5% during the same period, for semi-detached houses the reduction was 4% and terrace houses were down 2%.
Overall prices have reduced 56% since the peak in 2007, and are 13% lower than in 2005.
The NISRA report was based on sales using the HMRC stamp duty land tax and the Northern Ireland Valuation List.