New housing starts in Northern Ireland down 30%, the slowest housebuilding rate in almost a decade

New government data has revealed the number of new housing starts in Northern Ireland in the first half of 2023 have dropped by 30% on average – marking the slowest start to the year since 2014.

The low supply of housing stock is driving house price inflation and is the main reason why Northern Ireland is the only place in the UK where house prices are higher than they were a year ago.

The House Price Index shows a 2.7% annual increase at the end Q2 2023, with houses in the region reaching an average price of just under £174,000.

Against the backdrop of declining supply and rising prices, the Property Finance business of Close Brothers Group plc, believe supporting SME housebuilders is the answer to alleviating the shortage.

Gary Ferris, senior business development director, Close Brothers Property Finance, explained: “High construction costs have hampered housebuilding in Northern Ireland, with the International Construction Market Survey citing construction cost inflation in Belfast at 11% - the highest of any of the nine major UK cities in the study, including London.

"Skills shortages also continue to be felt acutely across the region and these challenging conditions are dragging on the market at a time when it’s vital for more houses to be built.

“SME developers will play a crucial role in helping to address the housing crisis in Northern Ireland. These developers are attuned to the housing needs of the local communities in which they operate and are well positioned to deliver homes that are tailored to meet these requirements.

“Building more homes not only alleviates supply constraints and price inflation; it also creates a ripple effect on other industries such as legal, finance, design and retail, providing welcome support, particularly during the current cost-of-living crisis.

"SME housebuilders also tend to employ locally, often hiring local apprentices and suppliers of building materials near the developments also benefit from their custom, which can also mean a lower carbon footprint.”

To date, Close Brothers Property Finance has lent £70million to homebuilders in the region and is currently supporting the development of over 200 new homes.

Belfast-based, Acorn Developments have recently developed sites in Lurgan, Portadown and Craigavon and are a Close Brothers borrower.

Richard Alexander, director of Acorn Developments, added: “We have found working with Close Brothers a breath of fresh air, they are very user friendly and pragmatic, particularly when compared to traditional lenders.”