A perilous time for house prices in Northern Ireland

This is a perilous time for the economy overall, in light of the crisis caused by the government’s mini budget last month.

But above all it is an dangerous time for house prices.

Ordinarily it would be no bad thing if property prices were to cool off, or even fall back somewhat.

The house price boom of 2006 and 2007 had disastrous consequences.

It was hailed as a sign of Northern Ireland having a booming economy, akin to that which was happening south of the border, where homes had also soared in price under the Celtic Tiger.

Such a reaction to huge price rises in the province was inappropriate but it was also understandable.

It was a time of great optimism for Northern Ireland. We had emerged so far from the Troubles that even Ian Paisley and Martin McGuinness were prepared to share power.

If political gravity could be defied, then why not economic gravity too? NI could be a prosperous society with high incomes and expensive homes.

It all ended in tears. Banks had lent far too much money to borrowers both here and in other places that experienced house price booms, such as much of America.

When prices collapsed, it almost brought down the entire banks, and could have triggered a great depression.

That did not quite happen but people were plunged into negative equity and lost their homes. Young people in particular suffered, having been told by their elders they could not go wrong with property.

At least we now know that you can go wrong. But prices in NI, as we report today on P15, have risen sharply over the last year (as they have done for two years, since lockdown).

There has been little discussion about the rises but another boom is the last thing we need, as is a bust.

The best outcome would be that higher interest rates lead to buyer sobriety and a slight retreat in home prices, so young people can afford to buy, rather than a rout.