If recent interest rate rise tames soaring house price growth in Northern Ireland, that is no bad thing

House prices in Northern Ireland have been soaring in recent months, and are still growing.

But they are growing at a softer pace, according to the University of Ulster home price index.

A number of other house price indexes have also recorded very strong rises in the province since the first Covid lockdown of 2020.

But in all of them the price of an average residential property is still below the last peak in 2007.

This shows the scale of the previous boom —that after 15 years prices have still not returned to their past high.

And even when they do return to that level, which they probably will do within the next year or two, they will still not be back to 2007 levels in real terms because inflation means that in effect they will be lower than they were then.

Such sobering data shows the danger of house price booms, in which people who buy at the height of the market suffer huge financial losses.

It could be said that we are now at a point when there is a fair balance in prices between those who have suffered the horror of negative equity (homes worth less than the debt used to buy them) and now have equity again, and young people who need prices to be affordable to get on the ladder.

Housing booms around the western world were partly caused by low interest rates after the crash. Ultra low rates were kept in place due to the pandemic, and are one of the reasons why prices have risen so sharply in the last two years.

The recent rise in interest rates by the Bank of England is a source of fresh anxiety to many people amid a cost of living crisis. But it is a modest increase, and rates are still at 1.75%. If this slightly dampens excessive house price growth, then that will be a welcome consequence of the pain. And if it helps tame soaring general inflation, and brings some relief to savers, who for 15 years have helped to bail out borrowers, then that too is a benefit of a difficult move by the central bank.