House prices set to fall further

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House prices in Northern Ireland are expected to fall further in the months ahead, a major report has forecast.

However, according to the latest report by the Royal Institution of Chartered Surveyors (RICS) and the Ulster Bank, there were some encouraging signs for the local housing market last month.

The report said that the market in greater Belfast is better than other parts of the Province.

RICS Northern Ireland housing spokesman Tom McClelland said: “At the lower end of the market at least, there are also increasing signs that asking prices and buyers’ ability to borrow are more closely aligned.”

The RICS data is based on questions put to surveyors as to whether home prices have increased or decreased over the previous three months, and by what percentage. The surveyors are also asked about other factors such as the number of inquiries and sales.

The latest survey reveals that the number of sales has improved because of seasonal factors like the start of spring.

But most surveyors are still reporting falling prices and expect prices to fall in the months ahead.

The April survey found 48 per cent of those asked, said that prices fell in the last three months, 10 per cent that they rose, and 42 per cent that they were unchanged.

Last month, the government’s house price index revealed that house prices in the UK are barely higher than a year ago.

The Office for National Statistics (ONS) said prices in February had risen by just 0.3 per cent over the past year.

There were big regional variations, with prices rising in London, the South East and Scotland, but falling sharply in Northern Ireland and the North East.

“In the 12 months to February 2012, average house prices increased in both England and Scotland by 0.4 per cent and 1.1 per cent respectively,” the ONS said.

“These increases were offset by decreases in Wales, where average prices decreased by 0.5 per cent, and Northern Ireland, where average prices fell by 9.7 per cent.

“The annual increase in average house prices in England was driven by increases in both London and the South East, where prices increased over the year by 1.7 per cent and 1.2 per cent respectively,” the ONS added.

By contrast, prices in the North East fell by 5 per cent in the year to February.

Earlier this year, the University of Ulster Quarterly House Price Index, which looked at the final quarter of 2011, reported that house prices in Northern Ireland have almost halved from peak levels.

In its report, the University of Ulster recorded an average home price of £137,219 in the last quarter of 2011, down 45.2 per cent from the peak of £250,586 in the third quarter of 2007.

The report stated that the housing market in the Province was still rather thin in terms of transaction levels with average prices tending to be lower rather than higher.

The report also noted that the market remained vulnerable to economic circumstances and to seasonal vagaries.