Movements by Bank of England and political instability has led to an “extraordinary shock” on the housing market

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NI house sales have fallen by almost one fifth (18%) from July-September, according to the latest Ulster University research

House sales across Northern Ireland have fallen by almost one fifth (18%) from July-September compared to the quarter previously, according to the latest research released today from Ulster University.

Findings from the latest NI Quarterly House Price Index show movements by the Bank of England to curb inflation, coupled with continued political instability, has led to an “extraordinary shock” on the housing market and dwindling consumer confidence.

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The research suggests that fixed rate mortgage deals climbing to over 6%, in response to the rapidly rising cost of borrowing, has impacted upon purchaser affordability and clear evidence of a reduction in market activity.

The Quarterly House Price Index, produced by Ulster University in partnership with the NI Housing Executive and Progressive Building Society, analyses the performance of the NI housing market during the third quarter of 2022 (July - September).

Other key report findings include:

Modest quarterly house price growth of 1.3% relative to Q2 2022, with the average house price now standing at £206,952· The terrace / townhouse sector exhibited the highest annual price changes of 7.4% compared to Q3 202, with the average price now standing at £140,231; The apartment sector has seen a 7.1% increase compared to Q3 last year, with its average price in Q3 2022 rising to £149,977; The semi-detached sector shows an annual price growth of 3.9%, slightly down on the previous quarter, with the average price now £187,613; The detached sector displayed annual price growth of 2.6%, a slight increase on the last quarter of 0.8%, and the average price is now £293,422.

Introducing the findings, lead researcher Dr Michael McCord, reader in real estate valuation at Ulster University, said: “We are currently facing mounting headwinds within the housing market as a consequence of political instability which has seen monetary and fiscal policy pull in separate directions.

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“The recent spike in mortgage interest rates as a consequence represents the largest interest rate shock since the 1980s, and despite some signs that they have peaked, we are now in the ‘new norm’ interest rate environment for the foreseeable future.

“As expected, this increased cost of borrowing has impacted on the housing market which has seen a slowing down in buyer enquiries, affordability and price growth. Whilst the market pricing levels have remained on par with Q2 of 2022, the obvious signs are that the price correction will materialise in 2023.”

Ursula McAnulty, head of research at NI Housing Executive, which commissions the research, explained: “A more subdued housing market was apparent in Q3 2022, with a reduction in the number of transactions, and whilst the average price of a property had a weighted annual increase of 3.3% in this latest quarter, this was the fourth consecutive quarter of slowing annual price growth.

“Economic headwinds will continue to be felt, with more cautious consumers, although the demand / supply imbalance will temper the impact of this caution on the housing market to some extent. Nevertheless, indicators show challenging times ahead for the housing market in NI.”

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Michael Boyd, deputy chief executive and finance director at Progressive, added: “As anticipated, there has been a definite slowing down in the local housing market this quarter with the majority of government districts seeing a decrease in price from Q2-Q3 2022. While the political instability and economic volatility has dampened buyer and seller enquiries, prices have remained on a par with Q2 of this year.

“There are indications that moving into the final quarter of the year, there will be a further slowing down of the market with demand falling and a challenging economic year ahead. While NI’s housing market is resilient and is one of the most affordable regions in the UK, political leadership to support stability will be key for the sector and the wider economy.”