Northern Ireland house prices drop despite rise in sales volume

The housing market continues to adapt and shift to the mood of buyers
The housing market continues to adapt and shift to the mood of buyers

The number of house sales during the second quarter of 2017 hit its highest level since the property crash a decade ago, although prices did fall slightly over the quarter before.

The figures are published in the latest Quarterly House Price Index from Ulster University covering the period form April to June and produced in partnership with the Northern Ireland Housing Executive and Progressive Building Society.

The report reveals an overall average house price of £148,499, down 3.7 per cent over the year, while the volume of transactions in the survey is 2,372.

The report suggests a number of factors that could be behind the outcome including the mix of properties by type and age in this survey and wider macroeconomic and political factors.

Uncertainty arising from Brexit, the outcomes of the UK general election, the present lack of agreement on the formation of the Northern Ireland Executive, slower growth rates in the national and local economy and a number of pessimistic economic forecasts over the short to medium term were also cited.

The price index report comes just a day after the Northern Ireland Housing Bulletin, published by the Department for Communities, stated that the total number of new dwelling starts in Northern Ireland recorded by Building Control for January – March 2017 was 1,883, an increase of 16.2% on the same quarter in 2016 (1,620). The total number of new dwelling completions was 1,482, down 1.1% on 2016 (1,498).

“This latest survey has mixed messages regarding the health of the Northern Ireland housing market - transaction levels are high suggesting a strong market in the second quarter of 2017 however this optimism is not reflected in average prices which are generally more subdued,” said lead researcher from UU, prof Stanley McGreal.

Michael Boyd, deputy chief executive and finance director at Progressive added: “There is no doubt that wider economic and political factors are having an impact including uncertainty following the triggering of Article 50, wage growth lagging behind inflation and the potential for the rise in interest rates.”

However he added that since the province remained one of the most affordable regions of the UK, confidence remained buoyed by affordability, a stable local labour market and economic growth of 0.3% in the early part of 2017.

“Just how the external political and macroeconomic issues play out remains to be seen but it is clear that these will be reflected in the level of growth of the local housing market in the months ahead,” he said.

Karly Greene, head of research and equality at the Housing Executive, said it was important to appreciate the wider context.

“The ongoing political and economic uncertainty mean there is relatively little impetus for house price growth, but the strong level of transactions suggests that the current pricing structure in the market is enabling many households, particularly first time buyers, to purchase homes at affordable prices.”