NI homebuyer enquiries plummet, but low supply levels push prices higher

Homebuyer enquires fell in Northern Ireland during August at the steepest rate since the early stages of the pandemic as the cost-of-living crisis and wider economic challenges impacted on market conditions, according to the latest Royal Institution of Chartered Surveyors (RICS) and Ulster Bank Residential Market Survey.

The latest results show that house prices in NI continued to rise firmly and are expected to continue rising into the short to medium-term. However, the picture regarding market activity is challenging.

Looking at new buyer enquiries, August was the second consecutive month of negative readings and the drop from July was relatively sharp, -20%, down from -4%. This represents the weakest return for buyer demand since May 2020.

With respect to agreed sales, a net balance of -12% of respondents was posted in August, representing a softening from the previous report. In the short term, +20% of NI respondents expects sales volumes to increase in the three months ahead. 12 months ahead, however, sales expectations are the most downbeat they have been since April 2020. The latest report is the third in succession that NI respondents, on balance, have indicated that they expect sales volumes to be lower in a year’s time.

In terms of supply, respondents indicated that there was a marginal increase in homes coming onto the market in August from low levels in July. However, anecdotally, surveyors continue to report significant shortages of available properties.

This lack of supply has been a crucial factor in underpinning growth in house prices. A net balance of +82% of NI respondents reported an increase in house prices during August. And looking ahead, a net balance of +79% of respondents expects prices to be higher in a year’s time. This is the highest reading across the UK regions.

Samuel Dickey, RICS Northern Ireland residential property spokesman, said: “Northern Ireland is seeing some scaling back of enquiries and demand from extremely high levels earlier in the year. This was very much expected. But whilst lower than it was, demand is still outstripping supply. We continue to see properties selling, and asking prices being met and sometimes exceeded. We are likely to see this lack of supply to be a significant factor in the market for the foreseeable and explains why surveyors expect price growth over the coming 12 months.”

Terry Robb, head of personal banking at Ulster Bank, added: “Mortgage demand has been very good year-to-date, and our expectation is that there will continue to be good demand from homebuyers in Northern Ireland. With regard to existing mortgage customers, we continue to see a strong demand for fixed rate mortgages as more and more customers are looking for certainty at this time”